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Raredon Corporation - Master Budget

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Direct Labor and Manufacturing Overhead Budgets) : The production department of Raredon Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:

Units to be 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
produced 12,000 14,000 13,000 11,000

Each unit requires 0.70 direct labor-hours, and direct direct labor -hour workers are paid $10.50 per hour. In addition, the variable manufacturing overhead rate is $1.50 per direct labor-hour. The fixed manufacturing 0verhead is $80,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $22,000 per quarter.

i. Prepare the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced.
ii. Prepare the company's manufacturing overhead budget.

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Your tutorial is in Excel. Click in cells to see computation. This is now a template for use in similar problems.

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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