Question

The production department of Ashdowns's Furniture has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year.

Quarter 1

Quarter 2

Quarter 3

Quarter 4

Units to be produced

16,000

15,000

14,000

15,000

Each unit requires 0.40 direct labour-hours and direct labour-hour workers are paid $11.50 per hour.

In addition, the variable manufacturing overhead rate is $1.25 per direct labour-hour. The fixed manufacturing overhead is $180,000 for the year. The only noncash element of manufacturing overhead is depreciation, which is $17,000 per quarter.

REQUIRED:

a. Prepare a direct labour budget for the upcoming fiscal year by quarter.

b. Prepare a manufacturing overhead budget for the upcoming fiscal year by quarter.