Question
The production manager of Rordan Corporation prepared the following quarterly production forecast for next year:
1st Quarter-- 2nd Quarter-- 3rd Quarter-- 4th Quarter
Units to be produced 8,000-- 6,500--- 7,000-- 7,500
Each unit requires 0.35 direct labor-hour, and direct laborers are paid $15.00 per hour.
Required:
1. Prepare a direct labor budget for next year.
Note: Round "Direct labor time per unit (hours)" answers to 2 decimal places.
1st Quarter-- 2nd Quarter-- 3rd Quarter-- 4th Quarter
Units to be produced 8,000-- 6,500--- 7,000-- 7,500
Each unit requires 0.35 direct labor-hour, and direct laborers are paid $15.00 per hour.
Required:
1. Prepare a direct labor budget for next year.
Note: Round "Direct labor time per unit (hours)" answers to 2 decimal places.
Answers
GPT-4o mini
To prepare a direct labor budget for Rordan Corporation for the next year, we will first calculate the total direct labor hours required for each quarter based on the forecasted units to be produced. Then, we will calculate the total direct labor cost associated with those labor hours.
### Step 1: Calculate the Direct Labor Time per Unit
Each unit requires 0.35 direct labor-hours.
### Step 2: Calculate Direct Labor Hours for Each Quarter
1. **1st Quarter**:
- Units to be produced: 8,000
- Direct Labor Hours = Units × Direct Labor Time per Unit
- Direct Labor Hours = 8,000 units × 0.35 hours/unit = 2,800 hours
2. **2nd Quarter**:
- Units to be produced: 6,500
- Direct Labor Hours = 6,500 units × 0.35 hours/unit = 2,275 hours
3. **3rd Quarter**:
- Units to be produced: 7,000
- Direct Labor Hours = 7,000 units × 0.35 hours/unit = 2,450 hours
4. **4th Quarter**:
- Units to be produced: 7,500
- Direct Labor Hours = 7,500 units × 0.35 hours/unit = 2,625 hours
### Step 3: Calculate Direct Labor Cost for Each Quarter
Direct laborers are paid $15.00 per hour.
1. **1st Quarter**:
- Direct Labor Cost = Direct Labor Hours × Pay Rate
- Direct Labor Cost = 2,800 hours × $15.00/hour = $42,000
2. **2nd Quarter**:
- Direct Labor Cost = 2,275 hours × $15.00/hour = $34,125
3. **3rd Quarter**:
- Direct Labor Cost = 2,450 hours × $15.00/hour = $36,750
4. **4th Quarter**:
- Direct Labor Cost = 2,625 hours × $15.00/hour = $39,375
### Summary of Direct Labor Budget
Here is the direct labor budget summarized for the four quarters:
| Quarter | Units to be Produced | Direct Labor Time per Unit (hours) | Direct Labor Hours | Direct Labor Cost |
|----------------|---------------------|-------------------------------------|--------------------|---------------------|
| 1st Quarter | 8,000 | 0.35 | 2,800 | $42,000 |
| 2nd Quarter | 6,500 | 0.35 | 2,275 | $34,125 |
| 3rd Quarter | 7,000 | 0.35 | 2,450 | $36,750 |
| 4th Quarter | 7,500 | 0.35 | 2,625 | $39,375 |
| **Total** | | | **10,150** | **$152,250** |
### Total Direct Labor Cost for the Year
**Total Direct Labor Cost** = $42,000 + $34,125 + $36,750 + $39,375 = **$152,250**
This is the comprehensive direct labor budget for Rordan Corporation for the upcoming year.
### Step 1: Calculate the Direct Labor Time per Unit
Each unit requires 0.35 direct labor-hours.
### Step 2: Calculate Direct Labor Hours for Each Quarter
1. **1st Quarter**:
- Units to be produced: 8,000
- Direct Labor Hours = Units × Direct Labor Time per Unit
- Direct Labor Hours = 8,000 units × 0.35 hours/unit = 2,800 hours
2. **2nd Quarter**:
- Units to be produced: 6,500
- Direct Labor Hours = 6,500 units × 0.35 hours/unit = 2,275 hours
3. **3rd Quarter**:
- Units to be produced: 7,000
- Direct Labor Hours = 7,000 units × 0.35 hours/unit = 2,450 hours
4. **4th Quarter**:
- Units to be produced: 7,500
- Direct Labor Hours = 7,500 units × 0.35 hours/unit = 2,625 hours
### Step 3: Calculate Direct Labor Cost for Each Quarter
Direct laborers are paid $15.00 per hour.
1. **1st Quarter**:
- Direct Labor Cost = Direct Labor Hours × Pay Rate
- Direct Labor Cost = 2,800 hours × $15.00/hour = $42,000
2. **2nd Quarter**:
- Direct Labor Cost = 2,275 hours × $15.00/hour = $34,125
3. **3rd Quarter**:
- Direct Labor Cost = 2,450 hours × $15.00/hour = $36,750
4. **4th Quarter**:
- Direct Labor Cost = 2,625 hours × $15.00/hour = $39,375
### Summary of Direct Labor Budget
Here is the direct labor budget summarized for the four quarters:
| Quarter | Units to be Produced | Direct Labor Time per Unit (hours) | Direct Labor Hours | Direct Labor Cost |
|----------------|---------------------|-------------------------------------|--------------------|---------------------|
| 1st Quarter | 8,000 | 0.35 | 2,800 | $42,000 |
| 2nd Quarter | 6,500 | 0.35 | 2,275 | $34,125 |
| 3rd Quarter | 7,000 | 0.35 | 2,450 | $36,750 |
| 4th Quarter | 7,500 | 0.35 | 2,625 | $39,375 |
| **Total** | | | **10,150** | **$152,250** |
### Total Direct Labor Cost for the Year
**Total Direct Labor Cost** = $42,000 + $34,125 + $36,750 + $39,375 = **$152,250**
This is the comprehensive direct labor budget for Rordan Corporation for the upcoming year.