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 8,400 6,500 7,200 8,100 Each unit requires 0.65 direct labor-hours, and direct laborers are paid $12.00 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 5,000 hours of work each quarter. If the number of required direct labor-hours is less than this number, the workers are paid for 5,000 hours anyway. Any hours worked in excess of 5,000 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 (hours)" answers to 2 decimal places.) Rordan Corporation Direct Labor Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year

Answer 1

Answer 1: - Direct Labor Budget assuming that direct labor force is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced.

Direct Labor Budget
Particulars	QTR 1	QTR 2	QTR 3	QTR 4	Full Year
Budgeted Production (Units)	8,400	6,500	7,200	8,100	30,200
Direct Labor hours per unit (Hours)	0.65	0.65	0.65	0.65	0.65
Total Labor Hours Needed (Total Hours)	5460	4225	4680	5265	19630
Direct Labor Cost per hour	$12	$12	$12	$12	$12
Budgeted Direct Labor Cost	$65,520	$50,700	$56,160	$63,180	$235,560

.Answer 2 :- Direct Labor Budget, if guaranteed payment for 5000 hours per Quarter to regular employees and Overtime labor payment at the rate of 1.5 times of regular Wage rate.

Direct Labor Budget
Particulars	QTR 1	QTR 2	QTR 3	QTR 4	Full Year
Budgeted Production (Units)	8,400	6,500	7,200	8,100	30,200
Direct Labor hours per unit (Hours)	0.65	0.65	0.65	0.65	0.65
Total Labor Hours Needed (Total Hours)	5460	4225	4680	5265	19630
Regular Hours (Maximum 5000 Hours)	5000	4225	4680	5000	18905
Overtime Hours (Total Hours - Regular Hours)	460	0	0	265	725
Wages for regular hours (@ $12 per Hour x 5000 Hours)	$60,000	$60,000	$60,000	$60,000	$240,000
Overtime Wages (@$18 per hour each overtime Hour)	$8,280	$0	$0	$4,770	$13,050
Total Direct Labor Cost	$68,280	$60,000	$60,000	$64,770	$253,050