Exercise 8-4 Direct Labor Budget [LO8-5]

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	10,200	7,500	8,100	10,400

Each unit requires 0.45 direct labor-hours, and direct laborers are paid $14.00 per hour.

Required:

1. Prepare the companys 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 companys direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is not adjusted each quarter. Instead, assume that the companys direct labor workforce consists of permanent employees who are guaranteed to be paid for at least 4,500 hours of work each quarter. If the number of required direct labor-hours is less than this number, the workers are paid for 4,500 hours anyway. Any hours worked in excess of 4,500 hours in a quarter are paid at the rate of 1.5 times the normal hourly rate for direct labor.

Rordan Corporation
Direct Labor Budget
	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Year
Direct labor time per unit (hours)
Total direct labor-hours needed
Direct labor cost per hour
Total direct labor cost

REQUIREMENT 2

Rordan Corporation
Direct Labor Budget
	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Year
Direct labor time per unit (hours)
Total direct labor-hours needed
Regular hours
Overtime hours
Wages for regular hours
Overtime wages
Total direct labor cost