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 $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. 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.

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Units to be produced 10,000 9,000 11,000 12,000

Explanation / Answer

1) Direct labour budget :

2&3) Manufacturing overhead budget :

1st quarter 2nd quarter 3rd quarter 4th quarter Year Units to be produced 10000 9000 11000 12000 42000 Labour hour per unit 0.20 0.20 0.20 0.20 0.20 Budgeted labour hour 2000 1800 2200 2400 8400 Rate per hour 12 12 12 12 12 Budgeted direct labour cost 24000 21600 26400 28800 100800

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