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A company has a budget for two product A and B as follows
Sales units product a 2000 product b 4500
production units a 1750 b 5000labour skilled at $10/hour 2 hour/unit 2 hours/units
unskilled at $ 7/hour 3 hour/unit 4 hours/unit
what is the budgeted cost for unskilled labour for the period ?
– answer is 176750, product a 1750x3x7= 36750
product b 5000x4x7 =140000
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176750
why do we have to multiply it with 7 and if so then why with 3 and 4 could you please explain sirIf each unit of A is budgeted to take 3 hours to make, then for 1,750 units they will expect to take 1,750 x 3 hours = 5,250 hours.
Each hour of labour is budgeted to cost $7 (for unskilled labour) and so they budgeted cost will be 5,250 hours x $7 = $36,750.
It is the same approach for product B.
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