Question

The Production Department of Hruska Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year: Units to be produced 1st Quarter 11,800 2nd Quarter 10,800 3rd Quarter 12,800 4th Quarter 13,800 Each unit requires 0.20 direct labor-hours and direct laborers are paid $16.00 per hour. In addition, the variable manufacturing overhead rate is $1.75 per direct labor-hour. The fixed manufacturing overhead is $98,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $38,000 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

Answer 1

1.

Hruska Corporation
Direct Labor Budget
	Quarter
	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Year
Required production in units (a)	11,800	10,800	12,800	13,800
Direct labor hours per unit (b)	0.20	0.20	0.20	0.20
Total direct labor hours needed (a x b)	2,360.00	2,160.00	2,560.00	2,760.00
Direct labor cost per hour (c )	16	16	16	16
Total direct labor cost {(axb) x c)	$ 37,760.00	$34,560.00	$ 40,960.00	$ 44,160.00	$157,440.00

2.

Hruska Corporation
Manufacturing overhead budget
	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Year
Total direct labor hours needed	2,360.00	2,160.00	2,560.00	2,760.00
Variable manufacturing overhead rate	1.75	1.75	1.75	1.75
Variable manufacturing overhead (Total direct labor hours needed x Variable manufacturing overhead rate)	4,130.00	3,780.00	4,480.00	4,830.00
Fixed manufacturing overhead	98,000.00	98,000.00	98,000.00	98,000.00
Total manufacturing overhead ( Variable manufacturing overhead + fixed manufacturing overhead)	102,130.00	101,780.00	102,480.00	102,830.00	409,220.00
Less: Depreciation expense	(38,000.00)	(38,000.00)	(38,000.00)	(38,000.00)	(152,000.00)
Cash disbursement for manufacturing overhead (Total estimated manufacturing overhead-Depreciation expense)	$64,130.00	$63,780.00	$64,480.00	$64,830.00	$257,220.00

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