Question

Exercise 8-4 Direct Labor Budget (L08-5) 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 8,800 7,000 7 ,400 8,300 Each unit requires 0.55 direct labor-hours, and direct laborers are paid $10.00 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 quaranteed to be paid for at least 4,500 hours of work each quarter. If the number of required direct labor hours is less than this number, the workers are paid for 4,500 hours anyway. Any hours worked in excess of 4,500 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. Required 1 Required 2 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. (Round "Direct labor time per unit Chours) answers to 2 decimal places.) < Prev 4 of 9

Answer 1

Solution 1:

Direct Labor Budget - Rordan Corporation
Particulars	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Year
Budgeted Production Units	8800	7000	7400	8300	31500
Direct labor hour per unit	0.55	0.55	0.55	0.55	0.55
Budgeted direct labor hours	4840	3850	4070	4565	17325
Direct labor rate per hour	$10.00	$10.00	$10.00	$10.00	$10.00
Budgeted direct labor costs	$48,400.00	$38,500.00	$40,700.00	$45,650.00	$173,250.00

Solution 2:

Direct Labor Budget - Rordan Corporation
Particulars	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Year
Budgeted Production Units	8800	7000	7400	8300	31500
Direct labor hour per unit	0.55	0.55	0.55	0.55	0.55
Budgeted direct labor hours	4840	3850	4070	4565	17325
Guaranteed hours	4500	4500	4500	4500	18000
Nos of hours to be paid	4840	4500	4500	4565	18405
Budgeted direct labor costs	$50,100.00	$45,000.00	$45,000.00	$45,975.00	$186,075.00