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	10,000	9,000	11,000	12,000

Each unit requires 0.20 direct labor-hours and direct laborers are paid $12.00 per hour.

In addition, the variable manufacturing overhead rate is $1.50 per direct labor-hour. The fixed manufacturing overhead is $80,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $20,000 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

1.Direct labour budget:

	1st quarter	2nd quarter	3rd quarter	4th quarter	year
Units to be produced	10,000	9,000	11,000	12,000	42,000
direct labour time per unit	0.20	0.20	0.20	0.20	0.20
total direct labour hours needed	2,000	1,800	2,200	2,400	8,400
direct labour cost per hour	$12.00	12.00	12.00	12.00	12.00
total direct labour cost	$24,000	$21,600	$26,400	$28,800	$100,800

2.manufacturing overhead budget:

	1st quater	2nd quarter	3rd quarter	4th quarter	year
bugeted direct labour hours (from above)	2,000	1,800	2,200	2,400	8,400
variable overhead rate	$1.50	$1.50	1.50	1.50	1.50
variable manufacturing overhead	3,000	2,700	3,300	3,600	12,600
fixed manufacturing overhead	80,000	80,000	80,000	80,000	320,000
total manufacturing overhead	83,000	82,700	83,300	83,600	332,600
less:depreciation	(20,000)	(20,000)	(20,000)	(20,000)	(80,000)
cash disbursements for manufacturing overhead	63,000	62,700	63,300	63,600	252,600