Cima P1 Exam Question No 26

Question No 26:

JK has budgeted sales for next year of 24,000 units and inventory levels are expected to remain constant throughout the year. Each unit produced will require 3 labour hours and the budgeted labour rate will be $15 per hour. It is estimated that 10% of units produced will be wasted.
It is expected that 15% of the total hours worked will be paid at overtime rates. 10% of the total hours will be paid at the basic rate plus an overtime premium of 50% of the basic rate. 5% of the total hours will be paid at the basic rate plus an overtime premium of 100% of the basic rate.
The labour cost budget for next year is:

A. $ 1,350,000
B. $ 1,306,800
C. $ 1,188,000
D. $ 1,320,000

Answer: D