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	11,000	10,000	12,000	13,000

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 $2.05 per direct labor-hour. The fixed manufacturing overhead is $90,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $30,000 per quarter.

Required:

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

Answer 1

			direct labor Budget
			1st Qtr	2nd qtr	3rd qtr	4th qtr	Year
Required production in units			11,000	10,000	12,000	13,000	46,000
direct labor time per unit			0.3	0.3	0.3	0.3	0.3
total direct labor hours needed			3300	3000	3600	3900	13800
direct labor cost per horu			12.5	12.5	12.5	12.5	12.5
total direct labor cost			41250	37500	45000	48750	172500
			Manufacturing overhead budget
			1st Qtr	2nd qtr	3rd qtr	4th qtr	Year
Variable manufacturing overhead			6765	6150	7380	7995	28290
fixed manufacturing overhead			90,000	90,000	90,000	90,000	360,000
total manufacturing overhead			96765	96150	97380	97995	388290
less Depreciation			30,000	30,000	30,000	30,000	120,000
cash disbursements for MOH			66,765	66,150	67,380	67,995	268,290
	Variable MOH = 2.05 * DLH's as calculated in direct labor budget