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 12,000 9,000 7,200 11,300 Each unit requires 0.65 direct labor-hours, and direct laborers are paid $20.00 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 7,000 hours of work each quarter. If the number of required direct labor-hours is less than this number, the workers are paid for 7,000 hours anyway. Any hours worked in excess of 7,000 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, 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 7,000 hours of work each quarter. If the number of required direct labor-hours is less than this number, the workers are paid for 7,000 hours anyway. Any hours worked in excess of 7,000 hours in a quarter are paid at the rate of 1.5 times the normal hourly rate for direct labor. (Round "Direct labor time per unit (hours)" answers to 2 decimal places.) Show less

Answer 1

Solution 1:

Direct Labor Budget - Rordan Corporation
Particulars	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Year
Budgeted Production Units	12000	9000	7200	11300	39500
Direct labor hour per unit	0.65	0.65	0.65	0.65	0.65
Budgeted direct labor hours	7800	5850	4680	7345	25675
Direct labor rate per hour	$20.00	$20.00	$20.00	$20.00	$20.00
Budgeted direct labor costs	$156,000.00	$117,000.00	$93,600.00	$146,900.00	$513,500.00

Solution 2:

Direct Labor Budget - Rordan Corporation
Particulars	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Year
Budgeted Production Units	12000	9000	7200	11300
Direct labor hour per unit	0.65	0.65	0.65	0.65
Budgeted direct labor hours	7800	5850	4680	7345
Regular hours	7000	7000	7000	7000
Overtime hours	800	0	0	345
Wages for regular hours	$140,000.00	$140,000.00	$140,000.00	$140,000.00
Overtime wages	$24,000.00	$0.00	$0.00	$10,350.00
Budgeted direct labor costs	$164,000.00	$140,000.00	$140,000.00	$150,350.00	$594,350.00