Pabon corporation makes one product budgeted unit sales for...

Pabon Corporation makes one product. Budgeted unit sales for August and September are 11,100 and 12,600 units, respectively. The ending finished goods inventory equals 40% of the following month's sales. The direct labor wage rate is $19.00 per hour. Each unit of finished goods requires 2.5 direct labor-hours. The estimated direct labor cost for August is closest to: (A) $222,300 (B) $29,250 (C) $389,000 (D) $555,750

Transcript

00:01 Right, so we basically going to be looking at a corporation that is a product.

00:07 It has a budgeted unit sales for august and september.

00:12 So i think we might just need to take note of that.

00:16 Because at the end of the day, we want to be looking at the direct labor cost, a direct labor cost given the information.

00:30 So what is the information? the information is simply that the budget itself actually given as we have the month of august and we have the month of september and the month of august is actually 11 ,100.

00:56 And for the month of september is 12 ,600.

01:00 Now the other piece of information that is given is that the closing inventory.

01:11 Okay, so maybe if we can just align our work.

01:15 So it becomes a little needer.

01:18 Okay, so we're talking of budgeted sales.

01:22 Now the closing inventory is actually going to be 40 % of the sales of the following month.

01:34 Says the ending finished goods inventory equals 40 % of the following month sales.

01:41 Okay, so what this means is this, it's going to be 40 % of september sales.

01:49 That is the closing infantry.

01:52 And therefore, we're going to be looking at september.

01:57 We don't know this.

02:00 So this information that's not going to be relevant.

02:03 So what is 40 % of the september sales? that is actually going to be 40 % of 12 ,600 here in this particular case and it's going to be 5 ,040.

02:16 5 ,040.

02:18 Okay, so what it also means is that before we will look at the other piece, before we conclude the calculations, other missing pieces of information include the fact that the direct labour wage rate is actually given...

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