The production manager of Rordan Corporation has submitted thefollowing quarterly production forecast for the upcoming fiscalyear:
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter |
| Units to be produced | 10,800 | 8,500 | 7,100 | 11,200 |
|
Each unit requires 0.25 direct labor-hours, and direct laborersare paid $20.00 per hour.
Required:
1. Prepare the company’s direct labor budget for the upcomingfiscal year. Assume that the direct labor workforce is adjustedeach quarter to match the number of hours required to produce theforecasted number of units produced.
2. Prepare the company’s direct labor budget for the upcomingfiscal year, assuming that the direct labor workforce is notadjusted each quarter. Instead, assume that the company’s directlabor workforce consists of permanent employees who are guaranteedto be paid for at least 2,500 hours of work each quarter. If thenumber of required direct labor-hours is less than this number, theworkers are paid for 2,500 hours anyway. Any hours worked in excessof 2,500 hours in a quarter are paid at the rate of 1.5 times thenormal hourly rate for direct labor.
