Question

The Production Department of Hruska Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:

	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter
Units to be produced	11,600	10,600	12,600	13,600

Each unit requires 0.20 direct labor-hours and direct laborers are paid $15.00 per hour.

In addition, the variable manufacturing overhead rate is $1.75 per direct labor-hour. The fixed manufacturing overhead is $96,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $36,000 per quarter.

Required:

1. Calculate the company’s total estimated direct labor cost for each quarter of the upcoming fiscal year and for the year as a whole.

2&3. Calculate the company’s total estimated manufacturing overhead cost and the cash disbursements for manufacturing overhead for each quarter of the upcoming fiscal year and for the year as a whole.

Answer 1

Hruska Corporation
Direct Labor Budget
	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Year
Required production in units	11600	10600	12600	13600	48400
Direct labor time per unit (hours)	0.20	0.20	0.20	0.20	0.20
Total direct labor­ hours needed	2320	2120	2520	2720	9680
Direct labor cost per hour	15.00	15.00	15.00	15.00	15.00
Total direct labor cost	34800	31800	37800	40800	145200
2
Hruska Corporation
Manufacturing Overhead Budget
	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Year
Variable manufacturing overhead	4060	3710	4410	4760	16940
Fixed manufacturing overhead	96000	96000	96000	96000	384000
Total manufacturing overhead	100060	99710	100410	100760	400940
Less depreciation	36000	36000	36000	36000	144000
Cash disbursements for manufacturing overhead	64060	63710	64410	64760	256940