The production manager of Rordan Corporation has submitted the following quarter
ID: 2559283 • Letter: T
Question
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 10,800 8,500 7,100 11,200 Each unit requires 0.25 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 2,500 hours of work each quarter. If the number of required direct labor-hours is less than this number, the workers are paid for 2,500 hours anyway. Any hours worked in excess of 2,500 hours in a quarter are paid at the rate of 1.5 times the normal hourly rate for direct labor.Explanation / Answer
1 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Required production in units 10800 8500 7100 11200 37600 Direct labor time per unit (hours) 0.25 0.25 0.25 0.25 0.25 Total direct labor-hours needed 2700 2125 1775 2800 9400 Direct labor cost per hour 20 20 20 20 20 Total direct labor cost 54000 42500 35500 56000 188000 2 Total direct labor-hours needed 2700 2125 1775 2800 9400 Regular hours paid 2500 2500 2500 2500 10000 Overtime hours paid 200 0 0 300 500 Wages for regular hours 50000 50000 50000 50000 200000 Overtime wages 6000 0 0 9000 15000 Total direct labor cost 56000 50000 50000 59000 215000
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