18. Shuck Inc. bases its manufacturing overhead budget on budgeted direct labor-

Question

18.

Shuck Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 7,500 direct labor-hours will be required in May. The variable overhead rate is $1.50 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $100,410 per month, which includes depreciation of $8,940. All other fixed manufacturing overhead costs represent current cash flows. The May cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

$111,660

$102,720

$91,470

$11,250

18.

Shuck Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 7,500 direct labor-hours will be required in May. The variable overhead rate is $1.50 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $100,410 per month, which includes depreciation of $8,940. All other fixed manufacturing overhead costs represent current cash flows. The May cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

Explanation / Answer

The correct option is option - B.

Cash disbursements for October = (Variable overhead rate * Number of direct-labor hours) + (Fixed manufacturing overhead - Depreciation)

= ($1.50 * 7500) + ($100,410 - $8,940.) = $102720

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