Question

The production manager of Rordan Corporation has submitted the following quarterly production forecast for the upcoming fiscal year Units to be produced 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 8,000 6,500 7.000 7.500 Each unit requires 0.35 direct labor-hours, and direct laborers are paid $12.00 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 2.600 hours of work each quarter. If the number of required direct labor hours is less than this number, the workers are paid for 2,600 hours anyway. Any hours worked in excess of 2,600 hours in a quarter are paid at the rate of 1.5 times the normal hourly rate for direct labor.

Answer 1

			Rordan Corporation
		Direct Labor Budget
				1st QTR	2nd QTR	3rd QTR	4th QTR	year
Required production in units				8,000	6,500	7,000	7,500
direct labor time per unit(hours)				0.35	0.35	0.35	0.35
total direct labor hours needed				2800	2275	2450	2625
direct labor cost per hour				12	12	12	12
total direct labor cost				33600	27300	29400	31500	121800
			Rordan Corporation
		Direct Labor Budget
				1st QTR	2nd QTR	3rd QTR	4th QTR	year
Required production in units				8,000	6,500	7,000	7,500
direct labor time per unit(hours)				0.35	0.35	0.35	0.35
total direct labor hours needed				2800	2275	2450	2625
regualar hours				2,600	2,600	2,600	2,600
ovetime hours				200	0	0	25
wages for regular hours				31200	31200	31200	31200
overtime wages				360	0	0	450
total direct labor cost				31560	31200	31200	31650	125610