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The production manager of Junnen Corporation has submitted the following forecast of units to be produced for each quarter of the upcoming fiscal year.
Each unit requires 0.40 direct labor-hours and direct labor-hour workers are paid $11 per hour.
Required:
1. Construct 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.
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 1,800 hours of work each quarter. If the number of required direct labor-hours is less than this number, the workers are paid for 1,800 hours anyway. Any hours worked in excess of 1,800 hours in a quarter are paid at the rate of 1.5 times the normal hourly rate for direct labor.
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Justify the selection of an appropriate allocation base, and calculate the predetermined overhead allocation rate.
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