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 0.30 direct labor-hours and direct laborers are paid $12.50 per hour.

In addition, the variable manufacturing overhead rate is $2.05 per direct labor-hour. The fixed manufacturing overhead is $90,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $30,000 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 11,000 10,000 12,000 13,000

Explanation / Answer

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

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.

388290

First quarter Second quarter Third quarter Fourth quarter Year Production units 11000 10000 12000 13000 46000 Labour hour per unit 0.30 0.30 0.30 0.30 0.30 Production hour 3300 3000 3600 3900 13800 Rate per hour 12.50 12.50 12.50 12.50 12.50 Direct labour cost 41250 37500 45000 48750 172500

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