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	11,100	10,100	12,100	13,100

Each unit requires 0.20 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 $91,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $31,000 per quarter.

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. (Round "Direct labor time per unit (hours)" answers to 2 decimal places.)

	1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Total direct labor cost

2&3Calculate 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.

	1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Total manufacturing overhead Cash disbursements for manufacturing overhead

Answer 1

1) Harventon corporation - Direct labor budget

Particulars	Q1	Q2	Q3	Q4	Year
Total units forecasted (A)	11,100	10,100	12,100	13,100	$46,400
Number of labor hours required per unit (B)	0.20	0.20	0.20	0.20	0.20
Number labor hours required (A*B)(C)	2,220	2,020	2,420	2,620	9,280
Cost per labor hour (D)	$12.50	$12.50	$12.50	$12.50	$12.50
Total direct labor cost (C*D)	$27,750	$25,50	$30,250	$32,750	$116,000

2) Total estimated manufacturing overhead

Particulars	Q1	Q2	Q3	Q4	Year
Direct labor hours (A)	2,220	2,020	2,420	2,620	9,280
Variable manufacturing over head per labor hour (B)	$1.5	$1.5	$1.5	$1.5	$1.5
Variable manufacturing over head ( A*B) (C)	$3,330	$3,030	$3,630	$3,930	$13,920
Fixed manufacturing over head (D)	$91,000	$91,000	$91,000	$91,000	$364,000
Total manufacturing overhead (C+D) (E)	$94,330	$94,030	$94,630	$94,930	$377,920
Non cash element (F)	$31,000	$31,000	$31,000	$31,000	$124,000
Cash disbursements element (E-F)	$63,330	$63,030	$63,630	$63,930	$253,920

I hope this will help you.