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 11,600 10,600 12,600 13,600

Each unit requires 0.20 direct labor-hours and direct laborers are paid $15.00 per hour. In addition, the variable manufacturing overhead rate is $1.75 per direct labor-hour. The fixed manufacturing overhead is $96,000 per quarter.

The only noncash element of manufacturing overhead is depreciation, which is $36,000 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

1) Harventon corporation - Direct labor budget

Particulars	Q1	Q2	Q3	Q4	Year
Total units forecasted (A)	11,600	10,600	12,600	13,600	$48,400
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)	2,320	2,120	2,520	2,720	9680
Cost per labor hour (D)	$15	$15	$15	$15	$15
Total direct labor cost (C*D)	$34,800	$31,800	$37,800	$40,800	$145,200

2) Total estimated manufacturing overhead

Particulars	Q1	Q2	Q3	Q4	Year
Direct labor hours (A)	2,320	2,120	2,520	2,720	9,680
Variable manufacturing over head per labor hour (B)	$1.75	$1.75	$1.75	$1.75	$1.75
Variable manufacturing over head ( A*B) (C)	$4,060	$3,710	$4,410	$4,760	$16,940
Fixed manufacturing over head (D)	$96,000	$96,000	$96,000	$96,000	$384,000
Total manufacturing overhead (C+D) (E)	$100,060	$99,710	$100,410	$100,760	$400,940
Non cash element (F)	$36,000	$36,000	$36,000	$36,000	$144,000
Cash disbursements element (E-F)	$64,060	$33,710	$64,410	$64,760	$256,940

I hope this will help you.