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 11,200 10,200 12,200 13,200

Each unit requires 0.25 direct labor-hours and direct laborers are paid $13.00 per hour.

In addition, the variable manufacturing overhead rate is $1.40 per direct labor-hour. The fixed manufacturing overhead is $92,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $32,000 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

  • Requirement 1

Q1

Q2

Q3

Q4

Year

A

Budgeted Production

                    11,200

                   10,200

                   12,200

                    13,200

                   46,800

B

Hours per unit

                         0.25

                        0.25

                        0.25

                        0.25

                       0.25

C=A X B

Total no. of hours

                       2,800

                      2,550

                     3,050

                      3,300

                   11,700

D

rate per hour

$                   13.00

$                  13.00

$                  13.00

$                   13.00

$                  13.00

E = C x D

Budgeted Labor Cost

$           36,400.00

$          33,150.00

$          39,650.00

$          42,900.00

$       152,100.00

  • Requirement 2 & 3

Q1

Q2

Q3

Q4

Year

Total no. of direct labor hours

                       2,800

                      2,550

                     3,050

                      3,300

                   11,700

Variable overhead rate per hour

$                      1.40

$                     1.40

$                    1.40

$                     1.40

$                    1.40

Total variable manufacturing overhead

$             3,920.00

$            3,570.00

$            4,270.00

$             4,620.00

$         16,380.00

Total Fixed overhead

$           92,000.00

$          92,000.00

$          92,000.00

$          92,000.00

$       368,000.00

Total manufacturing overhead

$           95,920.00

$          95,570.00

$          96,270.00

$          96,620.00

$       384,380.00

Less: Depreciation expense

$           32,000.00

$          32,000.00

$          32,000.00

$          32,000.00

$       128,000.00

Cash Disbursement for manufacturing overhead

$           63,920.00

$          63,570.00

$          64,270.00

$          64,620.00

$       256,380.00


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