The production department of Raredon Corporation has submitted the following for

Question

The production department of Raredon 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 16,000 15,000 14,000 15,000

Each unit requires 0.3 direct labor-hours, and direct labor-hour workers are paid $11.00 per hour.


In addition, the variable manufacturing overhead rate is $1.50 per direct labor-hour. The fixed manufacturing overhead is $95,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $28,000 per quarter.

Requirement 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. (Omit the "$" sign in your response.)

Raredon Corporation
Direct Labor Budget
1st quarter 2nd quarter 3rd quarter 4th quarter Year
Total direct labor-hours needed
Total direct labor cost $ $ $ $ $

Requirement 2:
Prepare the company's manufacturing overhead budget. (Omit the "$" sign in your response.)

Raredon Corporation
Manufacturing Overhead Budget
1st quarter 2nd quarter 3rd quarter 4th quarter Year
Variable manufacturing overhead $ $ $ $ $
Fixed manufacturing overhead
Total manufacturing overhead














Cash disbursements for
manufacturing overhead

$


$


$


$


$

Explanation / Answer

A) Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year Units to be produced 16,000 15,000 14,000 15,000 60,000 Direct labor time per unit (hours) 0.3 0.3 0.3 0.3 0.30 Total Direct labor-hours needed 4,800 4,500 4,200 4,500 18,000 Direct labor cost per hour 11.00 11.00 11.00 11.00 11.00 Total direct labor cost 52,800 49,500 46,200 49,500 198,000 B) Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year Budgeted Direct labor-hours 4,800 4,500 4,200 4,500 18,000 Variable overhead rate 1.50 1.50 1.50 1.50 1.50 Variable manufacturing overhead 7,200 6,750 6,300 6,750 27,000 Fixed manufacturing overhear 95,000 95,000 95,000 95,000 380,000 Total manufacturing overhead 102,200 101,750 101,300 101,750 407,000 less depreciations 28000 28000 28000 28000 112,000 Cash disbursments for manufacturing overhead 74,200 73,750 73,300 73,750 295,000

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