2. The Production Department of Hruska Corporation has submitted the following f

Question

2.

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

     In addition, the variable manufacturing overhead rate is $1.40 per direct labor-hour. The fixed manufacturing overhead is $92,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $32,000 per quarter.

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.)

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Explanation / Answer

Direct Labour Budget 1st Qrtr 2nd Qrtr 3rd Qrtr 4th Qrtr Units to be produced 11200 10200 12200 13200 Direct labour time per unit 0.25 0.25 0.25 0.25 Total Direct Labour hours needed 11,200*0.25 = 2,800 10,200*0.25 = 2,550 12,200*0.25=3,050 13,200*0.25=3,300 Direct Labour cost per hour 13 13 13 13 Total Direct Labour Cost 2,800*13 = 36,400 2,550*13=33,150 3,050*13=39,650 3,300*13=42,900 Manufacturing overhead budget Budgeted Direct Labour hour a 2800 2550 3050 3300 Variable overhead rate b 1.4 1.4 1.4 1.4 Variable manufacturing overhead c = a*b 3920 3570 4270 4620 Fixed manufacturing overhead d 92000 92000 92000 92000 Total Manufacturing overhead e = c+d 95920 95570 96270 96620 Less: Depreciation f 32000 32000 32000 32000 Cash Disbursment of manufacturing overhead g = e-f 63920 63570 64270 64620

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