Levi Strauss & Co. manufactures slacks and jeans under a variety of brand names, such as Dockers® and 501 Jeans®

Levi Strauss & Co. manufactures slacks and jeans under a variety of brand names, such as Dockers® and 501 Jeans®. Slacks and jeans are assembled by a variety of different sewing operations. Assume that the sales budget for Dockers and 501 Jeans shows estimated sales of 23,600 and 53,100 pairs, respectively, for May 2014. The finished goods inventory is assumed as follows:








Dockers 501 Jeans
May 1 estimated inventory 670 1,660
May 31 desired inventory 420 1,860



Assume the following direct labor data per 10 pairs of Dockers and 501 Jeans for four different sewing operations:













Direct Labor per 10 Pairs
Dockers 501 Jeans
Inseam 18 minutes 9 minutes
Outerseam 20 14
Pockets 6 9
Zipper 12 6
Total 56 minutes 38 minutes






a. Prepare a production budget for May. Prepare the budget in two columns: Dockers® and 501 Jeans®.

b. Prepare the May direct labor cost budget for the four sewing operations, assuming a $13 wage per hour for the inseam and outerseam sewing operations and a $15 wage per hour for the pocket and zipper sewing operations. Prepare the direct labor cost budget in four columns: inseam, outerseam, pockets, and zipper.


Answer:































a. LEVI STRAUSS & CO.
Production Budget
May 2014
(assumed data)
Dockers® 501 Jeans®
Expected units to be sold 23,600 53,100
Plus May 31 desired inventory 420 1,860
Total units 24,020 54,960
Less May 1 estimated inventory 670 1,660
Total units to be produced 23,350 53,300

b. LEVI STRAUSS & CO.
Direct Labor Cost Budget
May 2014
(assumed data)
Inseam
Outerseam
Pockets Zipper Total
Dockers® 42,030 1 46,700 2 14,010 3 28,020 4
501 Jeans® 47,970 5 74,620 6 47,9707 31,980 8
Total minutes 90,000 121,320 61,980 60,000
Total direct labor hours
(÷ 60 minutes) 1,500 2,022 1,033 1,000
× Direct labor rate × $13 × $13 × $15 × $15
Total direct labor cost $19,500 $26,286 $15,495 $15,000 $76,281

1 (23,350 ÷ 10 pairs) × 18 min. = 42,030 min.
2 (23,350 ÷ 10 pairs) × 20 min. = 46,700 min.
3 (23,350 ÷ 10 pairs) × 6 min. = 14,010 min.
4 (23,350 ÷ 10 pairs) × 12 min. = 28,020 min.
5 (53,300 ÷ 10 pairs) × 9 min. = 47,970 min.
6 (53,300 ÷ 10 pairs) × 14 min. = 74,620 min.
7 (53,300 ÷ 10 pairs) × 9 min. = 47,970 min.
8 (53,300 ÷ 10 pairs) × 6 min. = 31,980 min.