Exercise 8-15 Direct Labor and Manufacturing Overhead Budgets [LO8-5, LO8-6] The

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Exercise 8-15 Direct Labor and Manufacturing Overhead Budgets [LO8-5, LO8-6]

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 0.25 direct labor-hours and direct laborers are paid $11.00 per hour.

In addition, the variable manufacturing overhead rate is $1.60 per direct labor-hour. The fixed manufacturing overhead is $82,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $22,000 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 10,200 9,200 11,200 12,200

Explanation / Answer

1st quarter 2nd quarter 3rd quarter 4th quarter Year Units to be produced 10200 9200 11200 12200 42800 Labour hour per unit 0.25 0.25 0.25 0.25 0.25 Production labour hour 2550 2300 2800 3050 10700 Rate per hour 11 11 11 11 11 Direct labour cost 28050 25300 30800 33550 117700

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Exercise 8-15 Direct Labor and Manufacturing Overhead Budgets [LO8-5, LO8-6] The

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Exercise 8-15 Direct Labor and Manufacturing Overhead Budgets [LO8-5, LO8-6] The

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