Manufacturing Overhead Budget The direct labor budget of Krispin Corporation for

Question

Manufacturing Overhead Budget

The direct labor budget of Krispin Corporation for the upcoming fiscal year includes the following budgeted direct labor-hours.

The company%u2019s variable manufacturing overhead rate is $1.75 per direct labor-hour and the company%u2019s fixed manufacturing overhead is $35,000 per quarter. The only noncash item included in fixed manufacturing overhead is depreciation, which is $15,000 per quarter.

Required:

1.      Construct the company%u2019s manufacturing overhead budget for the upcoming fiscal year.

2.      Compute the company%u2019s manufacturing overhead rate (including both variable and fixed manufacturing overhead) for the upcoming fiscal year.  Round off to the nearest whole cent.

Explanation / Answer

Hi,

Please find the answer as follows;

Part A:

Part B:

Manufacturing overhead rate = 175700/20400 = 8.61275 or 8.6

Thanks.

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Budgeted Direct Labor Hours 5000 4800 5200 5400 20400 Variable Manfacturing OH rate per DLH 1.75 1.75 1.75 1.75 1.75 Budgeted Variable Manufacturing OH Expense 8750 8400 9100 9450 35700 Budgeted Fixed Manfacturing OH Expense 35000 35000 35000 35000 140000 Budgeted Total ManfacturingOH Expense 43750 43400 44100 44450 175700

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