Exercise 7-12 Direct Labor and Manufacturing Overhead Budgets [LO5, LO6]

The Production Department of Harveton 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	22,000	21,000	20,000	21,000

Each unit requires 0.80 direct labor-hours and direct labor-hour workers are paid $12.00 per hour.

In addition, the variable manufacturing overhead rate is $2.00 per direct labor-hour. The fixed manufacturing overhead is $89,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $25,000 per quarter.

Required:
1.	Prepare the company