II. The production manager of Widget Corporation has submitted the following qua
ID: 2596568 • Letter: I
Question
II. The production manager of Widget Corporation has submitted the following quarterly production forecast for the upcoming fiscal year Units to be produced 1t Qtr 2nd Qtr3rdQtr 4th Qtr 4,000 3,250 3,500... . 3,750 … Each unit requires O.5 direct labor hours, and direct laborers are paid $14.00 per hour. Required: 1. Prepare the company's 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 company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is not adjusted each quarter. Instead, assume that the company's direct labor workforce consists of permanent employees, who are guaranteed to be paid for at least 1,800 hours of work each quarter. If the number of required direct labor-hours is less than this number, the workers are to be paid for 1,800 hours anyway. Any hours worked in excess of 1,800 hours in a quarter are paid for 1,800 hours anyway. Any hours worked in excess of 1,800 hours in a quarter are paid at the rate of 1.5 times the normal hourly rate for direct labor.Explanation / Answer
1. 1 Quarter 2 Quarter 3 Quarter 4 Quarter
Units to be produced 4000 3250 3500 3750
Direct labor time per unit 0.5 0.5 0.5 0.5
Total labor hours 2000 1625 1750 1875
Cost per hour $14 $14 $14 $14
Total labor cost 28000 22750 24500 26250
(Total labor hours * Cost per hour)
2. 1 Quarter 2 Quarter 3 Quarter 4 Quarter
Total direct labor cost 29400 25200 25200 26775
Note:-
3 Quarter
1800 hr * $14
=25200
200 hr * 1.5 *$14
=4200
1800 hr * $14
=25200
0 hr* 1.5 *$14
= 0
1800 hr * $14
=25200
0 hr * 1.5 *$14
=0
1800 hr * $14
=25200
75 hr * 1.5 * $14
=1575
1 Quarter 2 Quarter
3 Quarter
4 Quarter Regular hours Overtime Regular hours Overtime Regular hours Overtime Regular hours Overtime1800 hr * $14
=25200
200 hr * 1.5 *$14
=4200
1800 hr * $14
=25200
0 hr* 1.5 *$14
= 0
1800 hr * $14
=25200
0 hr * 1.5 *$14
=0
1800 hr * $14
=25200
75 hr * 1.5 * $14
=1575