03 Jan Direct Labor and Manufacturing Overhead Budgets:
Direct Labor and Manufacturing Overhead Budgets: The production department of Raredon Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Units to be produced 12,000 14,000 13,000 11,000 Each unit requires 0.70 direct labor-hours, and direct labor-hour workers are paid $10.50 per hour. In addition, the variable manufacturing overhead rate is $1.50 per direct labor-hour. The fixed manufacturing overhead is $80,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $22,000 per quarter. Requirements: a. Prepare the company’s direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced. b. Prepare the company’s manufacturing overhead budget.
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