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	10,100	9,100	11,100	12,100

Each unit requires 0.25 direct labor-hours and direct laborers are paid $13.00 per hour.

In addition, the variable manufacturing overhead rate is $1.80 per direct labor-hour. The fixed manufacturing overhead is $81,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $21,000 per quarter.

Required:

1. Calculate the company’s total estimated direct labor cost for each quarter of the upcoming fiscal year and for the year as a whole. Assume that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the estimated number of units produced.

2&3. Calculate the company’s total estimated manufacturing overhead cost and the cash disbursements for manufacturing overhead for each quarter of the upcoming fiscal year and for the year as a whole.

Answer 1

Hruska Corporation
Direct Labor Budget
	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Year
Required production in units	10100	9100	11100	12100	42400
Direct labor time per unit (hours)	0.25	0.25	0.25	0.25	0.25
Total direct labor­hours needed	2525	2275	2775	3025	10600
Direct labor cost per hour	13.00	13.00	13.00	13.00	13.00
Total direct labor cost	32825	29575	36075	39325	137800
2&3
Hruska Corporation
Manufacturing Overhead Budget
	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Year
Variable manufacturing overhead	4545	4095	4995	5445	19080
Fixed manufacturing overhead	81000	81000	81000	81000	324000
Total manufacturing overhead	85545	85095	85995	86445	343080
Less depreciation	21000	21000	21000	21000	84000
Cash disbursements for manufacturing overhead	64545	64095	64995	65445	259080