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 11,500 2nd Quarter 10,500 3rd Quarter 12,500 4th Quarter 13,500 Units to be produced Each unit requires 0.25 direct labor-hours and direct laborers are paid $14.00 per hour In addition, the variable manufacturing overhead rate is $1.60 per direct labor-hour. The fixed manufacturing overhead is $95,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $35,000 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.) Hruska Corporation Direct Labor Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Required production in units Direct labor time per unit (hours) Total direct labor-hours needed Direct labor cost per hour Total direct labor cost 2. Prepare the company's manufacturing overhead budget. Hruska Corporation Manufacturing Overhead Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Variable manufacturing overhead Fixed manufacturing overhead Total manufacturing overhead Less depreciation Cash disbursements for manufacturing overhead

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Answer 1

1) Direct labor budget

	1st quarter	2nd quarter	3rd quarter	4th quarter	Year
Required production in units	11500	10500	12500	13500	48000
Labor hour per unit	0.25	0.25	0.25	0.25	0.25
Production labor hour	2875	2625	3125	3375	12000
rate per hour	14	14	14	14	14
Direct labor cost	40250	36750	43750	47250	168000

2) Manufacturing overhead budget

	1st quarter	2nd quarter	3rd quarter	4th quarter	Year
Variable manufacturing overhead	2875*1.6 = 4600	4200	5000	5400	19200
Fixed manufacturing overhead	95000	95000	95000	95000	380000
Total manufacturing overhead	99600	99200	100000	100400	399200
Less: Depreciation	-35000	-35000	-35000	-35000	-140000
Cash disbursement for manufacturing overhead	64600	64200	65000	65400	259200