6. Cash Payments for Manufacturing Overhead: Variable manufacturing overhead is

Question

6. Cash Payments for Manufacturing Overhead: Variable manufacturing overhead is $1.50 per unit produced and fixed manufacturing overhead is $25,000 per month. Fixed manufacturing overhead includes $10,000 in depreciation which does not require a cash outflow Required: Prepare a cash payments for manufacturing overhead budget, showing total manufacturing overhead cost by month and in total for the quarter. Check Figure: Total budgeted cash payments made for manufacturing overhead for the quarter - $116,813

Explanation / Answer

Cash Payments for Manufacturing overhead july August September total units to produce 9,750 23,500 14,625 47,875 *Variable overhead rate 1.5 1.5 1.5 1.5 = variable overhead cost 14625 35250 21938 71813 + Fixed overhead 25000 25000 25000 75000 = total manufacturing overhead cost 39625 60250 46938 146813 -Deduct Depreciation -10000 -10000 -10000 -30000 = manufacturing overhead - cash 29625 50250 36938 116813

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