Exercise 7-4 Direct Labor Budget [LO7-5] The production manager of Rordan Corpor
ID: 2509294 • Letter: E
Question
Exercise 7-4 Direct Labor Budget [LO7-5]
The production manager of Rordan Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:
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.)
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 1,800 hours of work each quarter. If the number of required direct labor-hours is less than this number, the workers are paid for 1,800 hours anyway. Any hours worked in excess of 1,800 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.)
The production manager of Rordan Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:
Explanation / Answer
Q1
Q2
Q3
Q4
Total
Required production (Units)
8200
6500
7100
8000
29,800
Direct labour time Per unit
0.25
0.25
0.25
0.25
0.25
Hours needed
2050
1625
1775
2000
7450
Direct labour cost per hour
12
12
12
12
12
Total direct labour cost
$24,600
$19500
$21,300
$24,000
$89,400
Answer 1
Answer 2
Q1
Q2
Q3
Q4
Total
Hours worked
2050
1625
1775
2000
7450
Minimum hours to be worked
1800
1800
1800
1800
Overtime
250
n/a
n/a
200
Minimum direct wages to be paid
(1,800*12)= 21600
(1,800*12)= 21600
(1,800*12)= 21600
(1,800*12)= 21600
86,400
Overtime
(250*18)=4500
-
-
(200*18)=3600
8,100
Total
26100
21600
21600
25200
94,500
Q1
Q2
Q3
Q4
Total
Required production (Units)
8200
6500
7100
8000
29,800
Direct labour time Per unit
0.25
0.25
0.25
0.25
0.25
Hours needed
2050
1625
1775
2000
7450
Direct labour cost per hour
12
12
12
12
12
Total direct labour cost
$24,600
$19500
$21,300
$24,000
$89,400
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