The Production Department of Hruska Corporation has submitted the following fore
ID: 2523429 • Letter: T
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 $12.50 per hour.
In addition, the variable manufacturing overhead rate is $1.50 per direct labor-hour. The fixed manufacturing overhead is $91,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $31,000 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 11,100 10,100 12,100 13,100Explanation / Answer
Direct Labor Budget:
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Year
Units to be produced
11100
10100
12100
13100
46400
Direct labor time per unit (hours)
0.20
0.20
0.20
0.20
0.20
Total direct labor hours needed
2220
2020
2420
2620
9280
Direct labor cost per hour
12.50
12.50
12.50
12.50
12.50
Total direct labor cost
27750
25250
30250
32750
116000
Calculation of estimated manufacturing overhead:
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Year
Budgeted direct labor-hours
2220
2020
2420
2620
9280
Variable overhead rate
1.50
1.50
1.50
1.50
1.50
Variable manufacturing overhead
3330
3030
3630
3930
13920
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Year
Units to be produced
11100
10100
12100
13100
46400
Direct labor time per unit (hours)
0.20
0.20
0.20
0.20
0.20
Total direct labor hours needed
2220
2020
2420
2620
9280
Direct labor cost per hour
12.50
12.50
12.50
12.50
12.50
Total direct labor cost
27750
25250
30250
32750
116000
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