Brockney Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The variable overhead rate is $8.60 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $107,970 per month, which includes depreciation of $9,760. All other fixed manufacturing overhead costs represent current cash flows. The July direct labor budget indicates that 6,100 direct labor-hours will be required in that month.Required:a. Determine the cash disbursements for manufacturing overhead for July.b. Determine the predetermined overhead rate for July.
What will be an ideal response?
a.
| July | ||
| Budgeted direct labor-hours | 6,100 | |
| Variable manufacturing overhead rate | $ | 8.60 |
| Variable manufacturing overhead | $ | 52,460 |
| Fixed manufacturing overhead | 107,970 | |
| Total manufacturing overhead | 160,430 | |
| Less depreciation | 9,760 | |
| Cash disbursements for manufacturing overhead | $ | 150,670 |
b.
| Total manufacturing overhead (a) | $ | 160,430 |
| Budgeted direct labor-hours (b) | 6,100 | |
| Predetermined overhead rate for the month (a) ÷ (b) | $ | 26.30 |
Business
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