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

Question

Shuck Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 8,100 direct labor-hours will be required in May. The variable overhead rate is $1.20 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $100,340 per month, which includes depreciation of $9,010. All other fixed manufacturing overhead costs represent current cash flows. The May cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

Shuck Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 8,100 direct labor-hours will be required in May. The variable overhead rate is $1.20 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $100,340 per month, which includes depreciation of $9,010. 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

Statement showing computations Particulars Amount No fo Direct Labour hours               8,100.00 Variable Overhead Rate                       1.20 Total Variable Overhead               9,720.00 Fixed Overheads Incl Dep          100,340.00 Depreciation               9,010.00 Fixed Overheads Excl Dep            91,330.00 Cash disbursements for Manu O/H = 9720 + 91330            101,050.00

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