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	11,800	10,800	12,800	13,800

Each unit requires 0.20 direct labor-hours and direct laborers are paid $16.00 per hour.

In addition, the variable manufacturing overhead rate is $1.75 per direct labor-hour. The fixed manufacturing overhead is $98,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $38,000 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

Requirement 1
Hruska Corporation
Estimated labour cost for the upcoming fiscal year
	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Total
Units to be produced	11,800	10,800	12,800	13,800	49,200
Required Labour hours	2,360	2,160	2,560	2,760	9,840
	(11800 X0.2)	(10800 X0.2)	(12800 X0.2)	(13800 X 0.2)
Direct labour cost ($)	37,760	34,560	40,960	44,160	157,440
	(2360 X16)	(2160X16)	(2560X16)	(2760X16)
Requirement 2 & 3
Hruska Corporation
Estimated total manufacturing overhead cost & cash disbursements for manufacturing overhead cost for the upcoming fiscal year
	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Total
Units to be produced	11,800	10,800	12,800	13,800	49,200
Required Labour hours	2,360	2,160	2,560	2,760	9,840
Variable manufacturing overhead ($)	4,130	3,780	4,480	4,830	17,220
	(2360X1.75)	(2160X1.75)	(2560X1.75)	(2760X1.75)
Fixed manufacturing overhead ($)	98,000	98,000	98,000	98,000	392,000
Total manufacturing overhead ($)	102,130	101,780	102,480	102,830	409,220
Less: Non cash overhead -Depreciation	38,000	38,000	38,000	38,000	152,000
cash disbursements for manufacturing Overhead cost	64,130	63,780	64,480	64,830	257,220