Question

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 11,100 10,100 12,100 13,100 Each unit requires 0.20 direct labor-hours and direct laborers are paid $12.50 per hour. In addition, the variable manufacturing overhead rate is $1.50 per direct labor-hour. The fixed manufacturing overhead is $91,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $31,000 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.

Answer 1

	1
			Q1	Q2	Q3	Q4	Year
		Units to be Produced	11100	10100	12100	13100	46400
		Direct Labor Hours PU	0.20	0.20	0.20	0.20	0.20
		Direct Labor Hours Required	2220	2020	2420	2620	9280
		Cost per DLH	12.50	12.50	12.50	12.50	12.50
		Direct Labor Cost Total	27750	25250	30250	32750	116000
	2		Q1	Q2	Q3	Q4	Year
		Direct Labor Hours Required	2220	2020	2420	2620	9280
		Variable MOH Rate Per DLH	1.50	1.50	1.50	1.50	1.50
		Variable MOH Cost Total	3330	3030	3630	3930	13920
		Add: Fixed OH Cost	91000	91000	91000	91000	364000
		Total Manufacturing OH Cost	94330	94030	94630	94930	377920
		Less: Depreciation-Non Cash Expense	31000	31000	31000	31000	124000
	3	Net Cash Disbursement	63330	63030	63630	63930	253920