Question

The production manager of Rordan Corporation has submitted the following quarterly production forecast for the upcoming fiscal year: 1st quarter - 8,800 units, 2nd quarter - 7,000 units, 3rd quarter - 7,400 units, 4th quarter - 8,300 units. Each unit requires 0.55 direct labor-hours, and direct laborers are paid $10.00 per hour. Prepare the company's direct labor budget for the upcoming fiscal year. (Round 'direct labor time per unit (hours)' answers to 2 decimal places.)

Answer 1

To prepare the direct labor budget, calculate the total direct labor hours by multiplying the units scheduled for production by the direct labor time per unit, then multiply that by the labor cost per hour.

Step-by-step explanation:

To prepare the company's direct labor budget for the upcoming fiscal year, we must calculate the total direct labor hours required for each quarter and then multiply by the direct labor cost per hour. Since each unit requires 0.55 direct labor-hours and laborers are paid $10.00 per hour, we can perform the following calculations:

• 1st Quarter: 8,800 units × 0.55 hours/unit = 4,840 hours; 4,840 hours × $10/hr = $48,400
• 2nd Quarter: 7,000 units × 0.55 hours/unit = 3,850 hours; 3,850 hours × $10/hr = $38,500
• 3rd Quarter: 7,400 units × 0.55 hours/unit = 4,070 hours; 4,070 hours × $10/hr = $40,700
• 4th Quarter: 8,300 units × 0.55 hours/unit = 4,565 hours; 4,565 hours × $10/hr = $45,650

Adding up these amounts gives us the total direct labor budget for the fiscal year.