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The production manager of Rordan Corporation has submitted the following of units to be produced by quarter for the upcoming fiscal year:
2nd Quarter 3rd Quarter 4th Quarter 1st Quarter Unit to be produce 6,500 7,000 7,500 8,000
Each unit requires 0.35 direct labor-hours, and direct laborers are paid $12.00 per hour.
Required:
1. Construct the company’s direct labor budget for the upcoming fiscal year, assuming that the direct labor workface is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced.
2. Construct 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 2,600 hours of work each quarter. If the number of required directed labor-hours is less than this number, the workers are paid for 2,600 hours anyway. Any hours worked in excess of 2,600 hours in quarter are paid at the rate of 1.5 times the normal hourly rate for direct labor.
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