The manufacturing overhead budget at Cutchin Corporation is based on budgeted di

Question

The manufacturing overhead budget at Cutchin Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 2,600 direct labor-hours will be required in September. The variable overhead rate is $6 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $43,000 per month, which includes depreciation of $3,760. All other fixed manufacturing overhead costs represent current cash flows. The September cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

a) $54,840

b) $39,240

c) $15,600

d) $58,600

Explanation / Answer

The September cash disbursements for manufacturing overhead on the manufacturing overhead budget = 2,600 direct labor-hours*$6 per direct labor-hour+budgeted fixed manufacturing overhead is $43,000 per month-non cash expenses of depreciation $3,760=$54,840.

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