The Production Department of Hruska Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |
| Units to be produced | 10,700 | 9,700 | 11,700 | 12,700 |
Each unit requires 0.25 direct labor-hours and direct laborers are paid $13.00 per hour.
In addition, the variable manufacturing overhead rate is $1.80 per direct labor-hour. The fixed manufacturing overhead is $87,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $27,000 per quarter.
Required:
1. Calculate the company’s total estimated direct labor cost for each quarter of 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 upcoming fiscal year and for the year as a
whole.
|
1.
| Direct Labor Budget | |||||
| Quarter | |||||
| 1 | 2 | 3 | 4 | Year | |
| Units to be produced (a) | 10,700 | 9,700 | 11,700 | 12,700 | |
| Direct labor hours per unit (b) | 0.25 | 0.25 | 0.25 | 0.25 | |
| Total direct labor hours needed (a x b) | 2,675.00 | 2,425.00 | 2,925.00 | 3,175.00 | |
| Direct labor cost per hour (c ) | 13 | 13 | 13 | 13 | |
| Cost of labor {(axb) x c) | 34,775.00 | 31,525.00 | 38,025.00 | 41,275.00 | 145,600.00 |
2.
| Calculation of Manufacturing Overhead Cost | |||||
| 1 | 2 | 3 | 4 | Year | |
| Total direct labor hours needed | 2,675.00 | 2,425.00 | 2,925.00 | 3,175.00 | |
| Variable manufacturing overhead rate | 1.80 | 1.80 | 1.80 | 1.80 | |
| Total Variable manufacturing overhead (Total direct labor hours needed x Variable manufacturing overhead rate) | 4,815.00 | 4,365.00 | 5,265.00 | 5,715.00 | |
| Total fixed manufacturing overhead | 87,000.00 | 87,000.00 | 87,000.00 | 87,000.00 | |
| Total estimated manufacturing overhead (Total Variable manufacturing overhead + Total fixed manufacturing overhead) | 91,815.00 | 91,365.00 | 92,265.00 | 92,715.00 | 368,160.00 |
3.
| Calculation of Cash Disbursement or Manufacturing overhead | |||||
| 1 | 2 | 3 | 4 | Year | |
| Total estimated manufacturing overhead | 91,815.00 | 91,365.00 | 92,265.00 | 92,715.00 | |
| Depreciation expense | (27,000.00) | (27,000.00) | (27,000.00) | (27,000.00) | |
| Cash disbursement (Total estimated manufacturing overhead-Depreciation expense) | 156,631.00 | 155,732.00 | 157,533.00 | 158,434.00 | 628,330.00 |
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