The Production Department of Hruska Corporation has submitted the following fore

Question

The Production Department of Hruska Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:

Each unit requires 0.20 direct labor-hours and direct laborers are paid $15.00 per hour.

In addition, the variable manufacturing overhead rate is $1.75 per direct labor-hour. The fixed manufacturing overhead is $96,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $36,000 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.

Explanation / Answer

1 Direct Labor Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Required production in units 11600 10600 12600 13600 48400 Direct labor time per unit (hours) 0.2 0.2 0.2 0.2 0.2 Total direct labor­hours needed 2320 2120 2520 2720 9680 Direct labor cost per hour 15 15 15 15 15 Total direct labor cost 34800 31800 37800 40800 145200 2 Manufacturing Overhead Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Variable manufacturing overhead 4060 3710 4410 4760 16940 Fixed manufacturing overhead 96000 96000 96000 96000 384000 Total manufacturing overhead 100060 99710 100410 100760 400940 Less depreciation 36000 36000 36000 36000 144000 Cash disbursements for manufacturing overhead 64060 63710 64410 64760 256940

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