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	10,600	9,600	11,600	12,600

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 $1.50 per direct labor-hour. The fixed manufacturing overhead is $86,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $26,000 per quarter.

Required:
1.	Prepare the company’s direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced. (Round "Direct labor time per unit (hours)" and "Direct labor cost per hour" answers to 2 decimal places.)

     

2.	Prepare the company’s manufacturing overhead budget.

     

Answer 1

1) Direct labor budget

	1st quarter	2nd quarter	3rd quarter	4th quarter	Year
Production Units	10600	9600	11600	12600	44400
Labor hour per unit	0.30	0.30	0.30	0.30	0.30
Production labor hour	3180	2880	3480	3780	13320
Rate per hour	12.5	12.5	12.5	12.5	12.5
Direct labor cost	39750	36000	43500	47250	166500

2) Manufacturing overhead budget

	1st quarter	2nd quarter	3rd quarter	4th quarter	Year
Production labor hour	3180	2880	3480	3780	13320
Variable overhead rate per hour	1.5	1.5	1.5	1.5	1.5
Variable manufacturing overhead	4770	4320	5220	5670	19980
Fixed manufacturing overhead	86000	86000	86000	86000	344000
Total manufacturing overhead	90770	90320	91220	91670	363980
Less: Depreciation	-26000	-26000	-26000	-26000	-104000
Cash disbursement on manufacturing overhead	64770	64320	65220	65670	259980