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	11,500	10,500	12,500	13,500

Each unit requires 0.25 direct labor-hours and direct laborers are paid $14.00 per hour.

In addition, the variable manufacturing overhead rate is $1.60 per direct labor-hour. The fixed manufacturing overhead is $95,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $35,000 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.

2&3. Calculate the company’s total estimated manufacturing overhead cost and the cash disbursements for manufacturing overhead for each quarter of the upcoming fiscal year and for the year as a whole.

Answer 1

Answer:
1)
Particulars	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	year
Units to be produced (A)	11,500	10,500	12,500	13,500	48,000
Direct labor hours per unit (B)	0.25	0.25	0.25	0.25	0.25
Total Direct labor hours required C = (A x B )	2,875	2,625	3,125	3,375	12,000
Cost per Direct labor hour (D)	$ 14	$ 14	$ 14	$ 14	$ 14
Total direct labor cost (C x D )	$ 40,250	$ 36,750	$ 43,750	$ 47,250	$ 168,000

2)
Particulars	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	year
Total Direct labor hours required	2,875	2,625	3,125	3,375	12,000
variable manufacturing overhead rate	$ 1.60	$ 1.60	$ 1.60	$ 1.60	$ 1.60
Total Variable manufacturing overhead (A)	$ 4,600	$ 4,200	$ 5,000	$ 5,400	$ 19,200
Total Fixed manufacturing overhead (B)	$ 95,000	$ 95,000	$ 95,000	$ 95,000	$ 380,000
Total manufacturing overhead (A + B )	$ 99,600	$ 99,200	$ 100,000	$ 100,400	$ 399,200

3)
Particulars	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	year
Total manufacturing overhead	$ 99,600	$ 99,200	$ 100,000	$ 100,400	$ 399,200
Less: Depreciation	($ 35,000)	($ 35,000)	($ 35,000)	($ 35,000)	($ 140,000)
Cash disbursement for manufacturing overhead	$ 64,600	$ 64,200	$ 65,000	$ 65,400	$ 259,200