Exercise 8-15 Direct Labor and Manufacturing Overhead Budgets [LO8-5, LO8-6]

The Production Department of Hruska 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 10,000 13,000 14,000

Each unit requires 0.2 direct labor-hours and direct laborers are paid $12.00 per hour.

In addition, the variable manufacturing overhead rate is $1.75 per direct labor-hour. The fixed manufacturing overhead is $86,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $23,000 per quarter.

Required:

1. Calculate the company's total estimated direct labor cost for each quarter of the upcoming fiscal year and for the year as a whole.

2 & 3. Calculate the company's total estimated manufacturing overhead cost and the cash disbursements for manufacturing overhead for each quarter of the upcoming fiscal year and for the year as a whole.