Question

In: Accounting

The Production Department of Hruska Corporation has submitted the following forecast of units to be produced...

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.

Solutions

Expert Solution

              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

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