The Bakery Department of Culbert Dessert Corporation has submitted the following forecast of fruit pies to be produced by quarter for the upcoming fiscal year.
| First Quarter | Second Quarter | Third Quarter | Fourth Quarter | |
| Units to be produced | 9,100 | 12,100 | 10,100 | 14,100 |
Each unit requires 0.60 direct labour-hours, and direct labour-hour workers are paid $10.00 per hour.
In addition, the variable manufacturing overhead rate is $2.00 per direct labour-hour. The fixed manufacturing overhead is $25,750 per quarter. The only non-cash element of manufacturing overhead is depreciation, which is $7,550 per quarter.
Required:
1.Prepare the company’s direct labour budget for the upcoming fiscal year, assuming that the direct labour workforce is adjusted each quarter to match the number of hours required to produce the forecast number of units produced.
2. Prepare the company’s manufacturing overhead budget. As per Schedule 5, your manufacturing overhead budget should also include the budgeted cash disbursements for overhead.
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Solution – The Bakery Department of Culbert Dessert
| Culbert Dessert Corporation | |||||
| Direct Labour Budget | |||||
| First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Year | |
| Units to be produced | 9,100 | 12,100 | 10,100 | 14,100 | 45,400 |
| Direct labour time per unit (hours) | 0.60 | 0.60 | 0.60 | 0.60 | 0.60 |
| Total direct labour-hours needed | 5,460 | 7,260 | 6,060 | 8,460 | 27,240 |
| Direct labour cost per hour | $10.00 | $10.00 | $10.00 | $10.00 | $10.00 |
| Total direct labour cost | $54,600 | $72,600 | $60,600 | $84,600 | $272,400 |
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