Mouw Inc. bases its manufacturing overhead budget on budgeted direct labor-hours

Question

Mouw Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 5,400 direct labor-hours will be required in January. The variable overhead rate is $4.40 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $77,220 per month, which includes depreciation of $9,720. All other fixed manufacturing overhead costs represent current cash flows. The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be: A) $67,500
B) $91,260
C) $100,980
D) $23,760 The Culver Company is preparing its Manufacturing Overhead Budget for the third quarter of the year. Budgeted variable factory overhead is $3.00 per unit produced; budgeted fixed factory overhead is $75,000 per month, with $16,000 of this amount being factory depreciation. If the budgeted cash disbursements for factory overhead for September are $80,000, then the budgeted production for September must be: A) 7,400 units
B) 6,200 units
C) 6,500 units
D) 7,000 units Mouw Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 5,400 direct labor-hours will be required in January. The variable overhead rate is $4.40 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $77,220 per month, which includes depreciation of $9,720. All other fixed manufacturing overhead costs represent current cash flows. The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be: D) $23,760 The Culver Company is preparing its Manufacturing Overhead Budget for the third quarter of the year. Budgeted variable factory overhead is $3.00 per unit produced; budgeted fixed factory overhead is $75,000 per month, with $16,000 of this amount being factory depreciation. If the budgeted cash disbursements for factory overhead for September are $80,000, then the budgeted production for September must be: A) 7,400 units
B) 6,200 units
C) 6,500 units
D) 7,000 units The Culver Company is preparing its Manufacturing Overhead Budget for the third quarter of the year. Budgeted variable factory overhead is $3.00 per unit produced; budgeted fixed factory overhead is $75,000 per month, with $16,000 of this amount being factory depreciation. If the budgeted cash disbursements for factory overhead for September are $80,000, then the budgeted production for September must be:

Explanation / Answer

OverHead Less : Depreciation (9,720.00) Cash Disbursements for FOH 67,500.00 Add : Variable OH 23,760.00 Cash Disbursements 91,260.00 Company's Budgeted Manufacturing 75,000.00 OverHead (16,000.00) Less : Depreciation 59,000.00 Variable OH 3V Now,the total Cash Disbursements 3V + 59,000 = 80,000 Solving the above equation,we get, 3V=21,000 or V=7,000 Hence , the number of units = 7,000

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