The production manager of Rordan Corporation has submitted the following forecas

Question

The production manager of Rordan Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:

Each unit requires 0.75 direct labor-hours, and direct laborers are paid $16 per hour.

Required:

1. Complete 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. (Round "Direct labor time per unit (hours)" answers to 2 decimal places.)

2. Complete 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 8,000 hours of work each quarter. If the number of required direct labor-hours is less than this number, the workers are paid for 8,000 hours anyway. Any hours worked in excess of 8,000 hours in a quarter are paid at the rate of 1.5 times the normal hourly rate for direct labor. (Input all amounts as positive values.)

Explanation / Answer

Rordan Corporation Direct Labor Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Required production in units 11000 8000 8500 10800 38300 Direct labor time per unit (hours) 0.75 0.75 0.75 0.75 0.75 Total direct labor-hours needed 8250 6000 6375 8100 28725 Direct labor cost per hour 16.00 16.00 16.00 16.00 16.00 Total direct labor cost 132000 96000 102000 129600 459600 Rordan Corporation Direct Labor Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Total direct labor-hours needed 8250 6000 6375 8100 28725 Regular Hours Paid 8000 8000 8000 8000 32000 Overtime Hours Paid 250 0 0 100 350 Wages for Regular Hours 1,28,000 1,28,000 1,28,000 1,28,000 5,12,000 (Regular Pay Rate*Regular Hours Paid) Overtime Wages 6000 0 0 2400 5,600 (Regular Pay Rate*1.5*Overtime Hours Paid) Total Direct Labor Cost 1,34,000 1,28,000 1,28,000 1,30,400 5,17,600

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