Answer:
Hruska Corporation
Production Department
a. Direct labor budget:
1st 2nd 3rd 4th Year
Quarter Quarter Quarter Quarter Total
Units to be produced 12,000 10,000 13,000 14,000 49,000
Hours required per unit 0.2 0.2 0.2 0.2 0.2
Total hours required 2,400 2,000 2,600 2,800 9,800
Direct labor rate $12 $12 $12 $12 $12
Total labor cost $28,800 $24,000 $31,200 $33,600 $117,600
b. Manufacturing overhead budget:
1st 2nd 3rd 4th Year
Quarter Quarter Quarter Quarter Total
Total labor hours 2,400 2,000 2,600 2,800 9,800
Variable overhead:
$31.75 per labor hour $76,200 $63,500 $82,550 $83,350 $311,150
Fixed overhead 386,000 386,000 386,000 386,000 1,544,000
Total overhead $462,000 $449500 $468,550 $469,350 $1,855,150
Explanation:
a) Direct labor budget is the planned expenditure on direct labor for manufacturing or production. It is the product of the rate of labor (per hour) and the total labor hours.
b) The manufacturing overhead budget comprises the variable overhead and the fixed overhead for manufacturing of goods. It is important to differentiate the two in order to determine the variable cost of production under the variable costing system.
