The Production Department of Harveton Corporation has submitted the following fo

Question

The Production Department of Harveton 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 0.80 direct labor-hours and direct labor-hour workers are paid $11.50 per hour. In addition, the variable manufacturing overhead rate is $2.50 per direct labor-hour. The fixed manufacturing overhead is $90,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $34,000 per quarter. 1. Prepare the company

Explanation / Answer

1. the labor budget: Q1: 16,000 units * 0.8 hours @ $ 11.5= $147,200 Q2: 15,000 units * 0.8 hours @ $ 11.5= $138,000 Q3: 14,000 units * 0.8 hours @ $ 11.5= $128,800 Q4: 15,000 units * 0.8 hours @ $ 11.5= $138,000 Total Labor for upcoming fiscal year = $ 552,000 Manufacturing Over head budget: Q1: 16,000 units * 0.8 hours @ $ 2.5 + $90,000+ $34,000 = $156,000 Q2: 15,000 units * 0.8 hours @ $ 2.5 + $90,000+ $34,000 = $154,000 Q3: 14,000 units * 0.8 hours @ $ 2.5 + $90,000+ $34,000 = $152,800 Q4: 15,000 units * 0.8 hours @ $ 2.5 + $90,000+ $34,000 = $154,000 Total Manufacturing over head for upcoming fiscal year = $ 616,000

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