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	10,100	9,100	11,100	12,100

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 $1.80 per direct labor-hour. The fixed manufacturing overhead is $81,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $21,000 per quarter.

Required:
1.	Prepare the company’s direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced. (Round "Direct labor time per unit (hours)" and "Direct labor cost per hour" answers to 2 decimal places.)

      

2.	Prepare the company’s manufacturing overhead budget.

     

Answer 1

Huska Corporation
Direct Labour Budget
		Quater 1	Quater 2	Quater 3	Quater 4
1	Units to be produce	10,100	9,100	11,100	12,100
2	Direct Labour time per unit ( hours)	0.25	0.25	0.25	0.25
3	Total Direct Labour hours needed (1 X 2)	2,525	2,275	2,775	3,025
4	Direct labour cost per hour	$         13.00	$         13.00	$         13.00	$         13.00
5	Total Direct labour cost        (3 X 4)	$ 32,825.00	$ 29,575.00	$ 36,075.00	$ 39,325.00
Huska Corporation
Manufacturing Overhead Budget
		Quater 1	Quater 2	Quater 3	Quater 4
1	Budget Direct labour hours	2,525	2,275	2,775	3,025
2	Variable overhead rate	$            1.80	$            1.80	$            1.80	$            1.80
3	Variable Manufacturing Overhead (1X2)	$   4,545.00	$   4,095.00	$   4,995.00	$   5,445.00
4	Add : Fixed Manufacturing Overhead	$ 81,000.00	$ 81,000.00	$ 81,000.00	$ 81,000.00
5	Total Manufacturing Overhead	$ 85,545.00	$ 85,095.00	$ 85,995.00	$ 86,445.00
6	Less : Depreciation	$ 21,000.00	$ 21,000.00	$ 21,000.00	$ 21,000.00
7	Cash Disbursements for manufacturing Overheads	$ 64,545.00	$ 64,095.00	$ 64,995.00	$ 65,445.00