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 11,200 8,500 8,600 10,900 Each unit requires 0.55 direct labor-hours, and direct laborers are paid $16.00 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 5.900 hours of work each quarter. If the number of required direct labor-hours is less than this number, the workers are paid for 5.900 hours anyway. Any hours worked in excess of 5,900 hours in a quarter are paid at the rate of 1.5 times the normal hourly rate for direct labor. Complete this question by entering your answers in the tabs below.

Answer 1

Answer 1:

Rordan Corporation Direct Labor Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Units to be produced 39,200 11,200 8,500 8,600 10,900 Direct Labor time per unit (hours) 0.55 0.55 0.55 0.55 0.55 Total direct labor hours needed 4,675 4,730 21,560 6,160 $16.00 5,995 $16.00 $74,800 $16.00 $16.00 $95,920 $344,960 $16.00 Direct labor cost per hour $98,560 $75,680 Total direct labor cost

Kindly note: In the format the first row was without a row header. I assume it is expected to be filled up. Hence I have given the 'units to be produced' in this table since these data are required for the calculations. In case this row (first row) is not expected to be filled up, you may not fill in content of first row.

For formulas, the above excel with 'show formula' is as below:

A В C F Rordan Corporation Direct Labor Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year 1 2 3 4 Units to be produced 11200 8500 8600 10900 39200 0.55 0.55 0.55 Direct Labor time per unit (hours) 0.55 0.55 5 -D4*D5 -E4*E5 -F4*F5 Total direct labor hours needed =B4*B5 -C4 C5 6 7 Direct labor cost per hour 16 16 16 16 16 -D6*D7 =E6*E7 =F6* F7 -C6*C7 8 Total direct labor cost -В6*B7 9

Answer 2:

Rordan Corporation Direct Labor Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Units to be produced 11,200 8,500 10,900 8,600 39,200 Direct Labor time per unit (hours) 0.55 0.55 0.55 0.55 0.55 Total direct labor hours needed 6,160 4,730 5,995 4,675 21,560 5,900 5,900 23,600 Regular hours Overtime hours 5,900 5,900 260 0 0 95 355 $94,400 $377,600 Wages for regular hours Overtime wages $94,400 $94,400 $94,400 $8,520 6,240 2,280 $96,680 $386,120 $100,640 $94,400 $94,400 Total direct labor cost

Overtime hours for 2nd and 3rd quarters are zero since available regular hours are higher than direct labor hours required.

Kindly note: In the format the first row was without a row header. I assume it is expected to be filled up. Hence I have given the 'units to be produced' in this table since these data are required for the calculations. In case this row (first row) is not expected to be filled up, you may not fill the content of first row.

For formulas, the above excel with 'show formula' is as below:

A В Е F Rordan Corporation Direct Labor Budget 1 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year 3 4 Units to be produced 11200 8600 39200 8500 10900 Direct Labor time per unit (hours) 0.55 0.55 0.55 0.55 5 0.55 -B4*B5 -E4*E5 -F4*F5 Total direct labor hours needed -C4*C5 -D4*D5 6 7 Regular hours 8 Overtime hours 9 Wages for regular hours 10 Overtime wages 5900 =SUM(B7:E7) -SUM(B8:E8) =SUM(B9:E9) -D8*16*1.5-E8*16*1.5 SUM(B10:E10) 5900 5900 5900 |-В6-B7 -E6-E7 -E7*16 0 -B7*16 -C7*16 ED7 16 -B8*16*1.5C8*16*1.5 -C9+C10 -B9+B10 -E9+E10 =F9+F10 11 Total direct labor cost D9+D10 12