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	10,500	9,500	11,500	12,500

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 $1.80 per direct labor-hour. The fixed manufacturing overhead is $85,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $25,000 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
Unit to be produced	10500	9500	11500	12500	44000
Labor hour per unit	0.3	0.30	0.30	0.30	0.30
Production labor hour	3150	2850	3450	3750	13200
Rate per hour	12.5	12.5	12.5	12.5	12.5
Direct labor cost	39375	35625	43125	46875	165000

2) Manufacturing overhead budget

	1st quarter	2nd quarter	3rd quarter	4th quarter	Year
Production labor hour	3150	2850	3450	3750	13200
Variable overhead per hour	1.8	1.8	1.8	1.8	1.8
variable manufacturing overhead	5670	5130	6210	6750	23760
Fixed manufacturing overhead	85000	85000	85000	85000	340000
Total manufacturing overhead	90670	90130	91210	91750	363670
Less; Depreciation	-25000	-25000	-25000	-25000	-100000
Cash disbursement on manufacturing overhead	65670	65130	66210	66750	263760