The production manager of Rordan Corporation has submitted the following quarterly production forecast for the upcoming fiscal year:  1st Quarter2nd Quarter3rd Quarter4th QuarterUnits to be produced10,0007,5008,00010,300  Each unit requires 0.55 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 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.

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Asked Dec 6, 2019
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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 10,000 7,500 8,000 10,300
 

 

Each unit requires 0.55 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 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.

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1.) Direct labor budget as per forcasted unit is attached above along with workings -

Direct...

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|Quarter 1 10,000 Quarter 2 Quarter 4 Particulars Units to be produced (forecasted) Total Direct labor hours @ 0.55 labor hour per unit Total direct labor hours ( in hours) Quarter 3 7,500 8,000 10,300 =10000 x 0.55= 7500 x 0.55 = 8000 x 0.55 =10,300 x 0.55 %3D 5500 4400 4125 5665 Direct labor hours patd @ $ 14 per hour Total direct labor hour cost Direct labor hour cost in $ =5500 x 14 |= 4125 x 14 = 4400 x 14 = 5665 x 14 61600 57750 77000 79310 Total direct labor budget for upcoming fiscal year = ' 77000 + 57750 + 61600 + 79310 Total direct labor budget for upcoming fiscal year $ 275660

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