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	11,400	10,400	12,400	13,400

Each unit requires 0.30 direct labor-hours and direct laborers are paid $12.50 per hour.

In addition, the variable manufacturing overhead rate is $1.50 per direct labor-hour. The fixed manufacturing overhead is $94,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $34,000 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. Assume that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the estimated number of units produced.

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

1
Hruska Corporation
Direct Labor Budget
	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Year
Required production in units	11400	10400	12400	13400	47600
Direct labor time per unit (hours)	0.30	0.30	0.30	0.30	0.30
Total direct labor­hours needed	3420	3120	3720	4020	14280
Direct labor cost per hour	12.50	12.50	12.50	12.50	12.50
Total direct labor cost	42750	39000	46500	50250	178500
2&3
Hruska Corporation
Manufacturing Overhead Budget
	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Year
Variable manufacturing overhead	5130	4680	5580	6030	21420
Fixed manufacturing overhead	94000	94000	94000	94000	376000
Total manufacturing overhead	99130	98680	99580	100030	397420
Less depreciation	34000	34000	34000	34000	136000
Cash disbursements for manufacturing overhead	65130	64680	65580	66030	261420