Production estimates for July are as follows Estimated inven

Production estimates for July are as follows:

Estimated inventory (units), July 1: 725

Desired inventory (units), July 31: 1,200

Expected sales volume (units), July : 7500

For each unit produced 4 hours of direct labor is required. The labor rate per hour is $15. The number of direct labor hours required for July production is?

Solution

Units for sale = 7500

Desired inventory = 1200

Total needed units = 7500+1200 = 8700

Initial inventory = 725

Required no of units = 8700 - 725 = 7975

Number of labour hours required = 7975 x 4 = 31900 hours