The Operating Budgets: Direct Labor and Overhead Budgets

The direct labor budget is simpler than the production or purchases budgets because there is no beginning or ending inventory of labor. As a result, the labor budget is simply the budgeted units produced times the number of direct labor hours per unit. This can be expressed in dollars by multiplying the total hours needed times the wage rate. Suppose that a company budgeted monthly production in the first quarter of $9,600,12,100,$ and $13,050$ units. Each unit takes $15$ minutes of direct labor time and the average wage rate is $$18$ per hour. Prepare a direct labor budget by month and in total for the first quarter of the year. $($Round your DLH per unit to two decimal places and round total direct labor hours to the nearest hour.$)$

January February March Total

Units to produce fill in the blank $6646690$c$6$f$8106$c$\_1$ fill in the blank $6646690$c$6$f$8106$c$\_2$ fill in the blank $6646690$c$6$f$8106$c$\_3$ fill in the blank $6646690$c$6$f$8106$c$\_4$

$\backslash$times Direct labor hours per unit fill in the blank $6646690$c$6$f$8106$c$\_5$ fill in the blank $6646690$c$6$f$8106$c$\_6$ fill in the blank $6646690$c$6$f$8106$c$\_7$ fill in the blank $6646690$c$6$f$8106$c$\_8$

Total direct labor hours fill in the blank $6646690$c$6$f$8106$c$\_9$ fill in the blank $6646690$c$6$f$8106$c$\_10$ fill in the blank $6646690$c$6$f$8106$c$\_11$ fill in the blank $6646690$c$6$f$8106$c$\_12$

$\backslash$times Wage rate fill in the blank $6646690$c$6$f$8106$c$\_13$ fill in the blank $6646690$c$6$f$8106$c$\_14$ fill in the blank $6646690$c$6$f$8106$c$\_15$ fill in the blank $6646690$c$6$f$8106$c$\_16$

Direct labor cost $fill in the blank $6646690$c$6$f$8106$c$\_17$ $fill in the blank $6646690$c$6$f$8106$c$\_18$ $fill in the blank $6646690$c$6$f$8106$c$\_19$ $fill in the blank $6646690$c$6$f$8106$c$\_20$

The overhead budget is very similar to the direct labor budget. It can be as simple as a list of overhead costs, or it can separate variable from fixed overhead. If variable overhead is based on direct labor hours, then the overhead budget will be done after the direct labor budget is complete. Suppose that a company budgeted monthly direct labor hours in the first quarter of $2,400$ hours, $3,025$ hours, and $3,263$ hours. The variable overhead rate is $$3\mathrm{.}20$ per direct labor hour. Fixed overhead is $$3,800$ per month. Prepare an overhead budget for the first quarter of the year by month and in total. $($Round overhead rate to two decimal places and round all dollar amounts to the nearest dollar.$)$

January February March Total

Total direct labor hours fill in the blank $6646690$c$6$f$8106$c$\_21$ fill in the blank $6646690$c$6$f$8106$c$\_22$ fill in the blank $6646690$c$6$f$8106$c$\_23$ fill in the blank $6646690$c$6$f$8106$c$\_24$

$\backslash$times Variable overhead rate fill in the blank $6646690$c$6$f$8106$c$\_25$ fill in the blank $6646690$c$6$f$8106$c$\_26$ fill in the blank $6646690$c$6$f$8106$c$\_27$ fill in the blank $6646690$c$6$f$8106$c$\_28$

Budgeted variable overhead fill in the blank $6646690$c$6$f$8106$c$\_29$ fill in the blank $6646690$c$6$f$8106$c$\_30$ fill in the blank $6646690$c$6$f$8106$c$\_31$ fill in the blank $6646690$c$6$f$8106$c$\_32$

$+$ Budgeted fixed overhead fill in the blank $6646690$c$6$f$8106$c$\_33$ fill in the blank $6646690$c$6$f$8106$c$\_34$ fill in the blank $6646690$c$6$f$8106$c$\_35$ fill in the blank $6646690$c$6$f$8106$c$\_36$

Total budgeted overhead $fill in the blank $6646690$c$6$f$8106$c$\_37$ $fill in the blank $6646690$c$6$f$8106$c$\_38$ $fill in the blank $6646690$c$6$f$8106$c$\_39$ $fill in the blank $6646690$c$6$f$8106$c$\_40$

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