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 $16.00 per hour.

In addition, the variable manufacturing overhead rate is $1.75 per direct labor-hour. The fixed manufacturing overhead is $98,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $38,000 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

Requirement 1 Hruska Corporation Estimated labour cost for the upcoming fiscal year 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Units to be produced            11,800            10,800            12,800           13,800       49,200 Required Labour hours              2,360 2,160              2,560             2,760         9,840 (11800 X0.2) (10800 X0.2) (12800 X0.2) (13800 X 0.2) Direct labour cost ($)            37,760            34,560            40,960           44,160    157,440 (2360 X16) (2160X16) (2560X16) (2760X16) Requirement 2 & 3 Hruska Corporation Estimated total manufacturing overhead cost & cash disbursements for manufacturing overhead cost for the upcoming fiscal year 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Units to be produced            11,800            10,800            12,800           13,800       49,200 Required Labour hours              2,360 2,160              2,560             2,760         9,840 Variable manufacturing overhead ($)              4,130 3,780              4,480             4,830       17,220 (2360X1.75) (2160X1.75) (2560X1.75) (2760X1.75) Fixed manufacturing overhead ($)            98,000            98,000            98,000           98,000    392,000 Total manufacturing overhead ($)          102,130          101,780          102,480         102,830    409,220 Less: Non cash overhead -Depreciation            38,000            38,000            38,000           38,000    152,000 cash disbursements for manufacturing Overhead cost            64,130            63,780            64,480           64,830    257,220

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