From the following details provided by NutShell, Inc, prepare the manufacturing overhead budget for the year

Question

Also, calculate the predetermined overhead allocation rate, using direct labor hours as the allocation base.

First Quarter Second Quarter Third Quarter Fourth Quarter
Budgeted production units 15,000 18,000 21,000 24,000
Variable overhead cost per unit $45 $45 $45 $45
Fixed overhead costs:
Depreciation $3,000 $3,000 $3,000 $3,000
Rent $5,000 $5,750 $6,250 $7,250
Direct Labor Hours 12,500 14,500 17,200 12,800

What will be an ideal response

Answer 1

NutShell, Inc.
Manufacturing Overhead Budget
For the Year Ended December 31, 20XX
First Quarter Second Quarter Third Quarter Fourth Quarter Total
Budgeted units to be produced 15,000 18,000 21,000 24,000 78,000
VOH* cost per unit $45 $45 $45 $45 $45
Budgeted VOH $675,000 $810,000 $945,000 $1,080,000 $3,510,000
Budgeted FOH**
Depreciation $3,000 $3,000 $3,000 $3,000 $12,000
Rent 5,000 5,750 6,250 7,250 24,250
Total budgeted FOH $8,000 $8,750 $9,250 $10,250 $36,250
Budgeted manufacturing overhead costs $683,000 $818,750 $954,250 $1,090,250 $3,546,250
Direct labor hours (DLHr) 12,500 14,500 17,200 12,800 57,000
Budgeted manufacturing overhead costs $3,546,250
Predetermined overhead allocation rate $62.22

*VOH - Variable Manufacturing Overhead
**FOH - Fixed Manufacturing Overhead