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	11,000	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: (SHOW ALL WORK)

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.direct labour budget.

	1st quarter	2nd quarter	3rd quarter	4th quarter	year
Required production in units	11,000	10,000	12,000	13,000	46,000
direct labour time per unit	0.30	0.30	0.30	0.30	0.30
Total direct labour hours needed	3,300	3,000	3,600	3,900	13,800
direct labour cost per hour	$12.50	$12.50	$12.50	$12.50	$12.50
Total direct labour cost	$41,250	$37,500	$45,000	$48,750	$172,500

2.total estimated overhead cost and cash disbursement:

	1st quarter	2nd quarter	3rd qurter	4thquarter	total
variable manufacturing overhead (direct labour hours as above * $2.05 )	$6,765	$6,150	$7,380	$7,995	$28,290
fixed manufacturing overhead	$90,000	$90,000	$90,000	$90,000	$360,000
total manufacturing overhead	$96,765	$96,150	$97,380	$97,995	$388,290
less: depreciation	(30,000)	(30,000)	(30,000)	(30,000)	(120,000)
cash disbursements for manufacturing overhead	$66,765	$66,150	$67,380	$67,995	$268,290