Question

The production manager of Rordan Corporation has submitted the following quarterly production forecast for the upcoming fiscal year:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Units to be produced 10,400 8,000 8,200 10,500
Each unit requires 0.35 direct labor-hours, and direct laborers are paid $14.00 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 3,500 hours of work each quarter. If the number of required direct labor-hours is less than this number, the workers are paid for 3,500 hours anyway. Any hours worked in excess of 3,500 hours in a quarter are paid at the rate of 1.5 times the normal hourly rate for direct labor.

Answer 1

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

Units to be produced 10,400 8,000 8,200 10,500

Each unit requires 0.35 direct labor-hours, and direct laborers are paid $14.00 per hour.

1) 1st Quarter:

Direct labor= (0.35*10,400)*14= $50,960

2nd Q:

Direct labor= (0.35*8,000)*14= 39,200

3rd Q:

Direct labor= (8,200*0.35)*14= 40,180

4th Q:

Direct labor=(10,500*0.35)*14= 51,450

Total cost for the fiscal year= $181,790

2) 1sr Q:

Direct labor required= 10,400*0.35= 3,640

Direct labor cost= 3,500*14 + 140*14*1.5= 51,940

2nd Q:

Direct labor cost= 2,800*14= 39,200

3rd Q:

Direct labor cost= 2,870*14= 40,180

4th Q:

Direct labor required= 10,500*0.35= 3,675

Direct labor cost= 3,500*14 + 175*14*1.5= 64,771

Total labor cost= 196,090