Haylock Inc, bases its manufacturing overhead budget on budgeted direct labor-ho

Question

Haylock Inc, bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 7,100 direct labor-hours wil be required in August. The variable overhead rate is $1.90 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $100,370 per month, which includes depreciation of $8,980. All other fixed manufacturing overhead costs represent current cash flows. The August cash disbursements for manufacturing overhead on the manufacturing overhead budget should bo: Multiple Choice $13,490 104,880 $91,390 $113,860

Explanation / Answer

7.

August cash disbursements for manufacturing overhead on the manufacturing overhead budget = Variable overhead + Fixed overhead

= (7,100 direct labour hours * 1.9 per direct labour hour) + (100,370 fixed manufacturing overhead - 8,980 depreciation)

= 13,490 + 91,390

= 104,880

* Depreciation is added back as it is a non cash expenditure

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8.

Cash disbursements for selling and administrative expenses on the March selling and administrative expense budget = Variable selling and administrative expense + Fixed selling and adminstrative expense

= (2,200 units * 4.5 per unit) + (35,720 fixed selling and administrative expense - 3,700 depreciation)

= 9,900 + 32,020

= 41,920

* Depreciation is added back as it is a non cash expenditure

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