Question

The production manager of Rordan Corporation has submitted the following quarterly production forecast for the upcoming fiscal year:

	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter
Units to be produced	11,200	8,500	8,600	10,900

Each unit requires 0.55 direct labor-hours, and direct laborers are paid $16.00 per hour.

Required:

1. Prepare the company’s direct labor budget for the upcoming fiscal year. Assume that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced.

2. Prepare the company’s direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is not adjusted each quarter. Instead, assume that the company’s direct labor workforce consists of permanent employees who are guaranteed to be paid for at least 5,900 hours of work each quarter. If the number of required direct labor-hours is less than this number, the workers are paid for 5,900 hours anyway. Any hours worked in excess of 5,900 hours in a quarter are paid at the rate of 1.5 times the normal hourly rate for direct labor.

1. Required

Rordan Corporation
Direct Labor Budget
	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Year
Required production in unitsselected answer correct	11,200selected answer correct	8,500selected answer correct	8,600selected answer correct	10,900selected answer correct	39,200selected answer correct
Direct labor time per unit (hours)	0.55selected answer correct	0.55selected answer correct	0.55selected answer correct	0.55selected answer correct	0.55selected answer correct
Total direct labor-hours needed	6,160selected answer correct	4,675selected answer correct	4,730selected answer correct	5,995selected answer correct	21,560selected answer correct
Direct labor cost per hour	$16selected answer correct	$16selected answer correct	$16selected answer correct	$16selected answer correct	$16selected answer correct
Total direct labor cost	$98,560selected answer correct	$74,800selected answer correct	$75,680selected answer correct	$95,920selected answer correct	$344,960selected answer correct

2. Required

Rordan Corporation
Direct Labor Budget
	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Year
Required production in unitsselected answer correct	not attempted	not attempted	not attempted	not attempted
Direct labor time per unit (hours)	6160selected answer incorrect	4675selected answer incorrect	4730selected answer incorrect	5995selected answer incorrect
Total direct labor-hours needed	5,900selected answer incorrect	5,900selected answer incorrect	5,900selected answer incorrect	5,900selected answer incorrect
Regular hours	260selected answer incorrect	0selected answer incorrect	0selected answer incorrect	95selected answer incorrect
Overtime hours	94,400selected answer incorrect	94,400selected answer incorrect	94,400selected answer incorrect	94,400selected answer incorrect
Wages for regular hours	$6,240selected answer incorrect	$0selected answer incorrect	$0selected answer incorrect	$2,280selected answer incorrect	8,520
Overtime wages	100,640selected answer incorrect	94,400selected answer incorrect	94,400selected answer incorrect	96,680selected answer incorrect	386,120
Total direct labor cost	$106,880	$94,400	$94,400	$98,960	$394,640

Answer 1