The Charade Company is preparing its Manufacturing Overhead budget for the fourt
ID: 2447410 • Letter: T
Question
The Charade Company is preparing its Manufacturing Overhead budget for the fourth quarter of the year. The budgeted variable factory overhead is $5.00 per direct labor hour; the budgeted fixed factory overhead is $75,000 per month, of which $15,000 is factory depreciation.
If the budgeted direct labor time for November is 7,000 hours, then the total budgeted factory overhead for November is:
1) $95,000.
2) $110,000.
3) $75,000.
4) $125,000.
If the budgeted cash disbursements for factory overhead for December total $105,000, then the budgeted direct labor hours for December must be:
1) 6,000 hours.
2) 21,000 hours.
3) 9,000 hours.
4) 3,000 hours.
If the budgeted direct labor time for December is 8,000 hours, then total budgeted factory overhead per direct labor hour is (rounded):
1) $14.38.
2) $9.38.
3) $12.50.
4) $16.25.
Explanation / Answer
The Charade Company is preparing its Manufacturing Overhead budget for the fourth quarter of the year. The budgeted variable factory overhead is $5.00 per direct labor hour; the budgeted fixed factory overhead is $75,000 per month, of which $15,000 is factory depreciation.
If the budgeted direct labor time for November is 7,000 hours, then the total budgeted factory overhead for November is:
Total budgeted factory overhead for November = Variable Factory Overhead rate per direct labor hour * budgeted direct labor time for November + Fixed Factory Overhead per month
Total budgeted factory overhead for November = 5*7000 + 75000
Total budgeted factory overhead for November = $ 110,000
2) $110,000.
If the budgeted cash disbursements for factory overhead for December total $105,000, then the budgeted direct labor hours for December must be:
Budgeted cash disbursements for factory overhead for December total = $ 105000
Total budgeted factory overhead for December = Budgeted cash disbursements for factory overhead + Depreciation per month
Total budgeted factory overhead for December = 105000 + 15000
Total budgeted factory overhead for December = 120000
Variable Factory Overhead = Total budgeted factory overhead for December - Fixed Overhead
Variable Factory Overhead = 120000 - 75000
Variable Factory Overhead = 45000
Budgeted direct labor time for December = Variable Factory Overhead / Variable Factory Overhead rate per direct labor hour
Budgeted direct labor time for December = 45000/5
Budgeted direct labor time for December = 9000
3) 9,000 hours.
If the budgeted direct labor time for December is 8,000 hours, then total budgeted factory overhead per direct labor hour is (rounded):
Total budgeted factory overhead for December= Variable Factory Overhead rate per direct labor hour * budgeted direct labor time for December + Fixed Factory Overhead per month
Total budgeted factory overhead for December = 5*8000 + 75000
Total budgeted factory overhead for December = $ 115,000
Total budgeted factory overhead per direct labor hour = Total budgeted factory overhead for December/budgeted direct labor time for December
Total budgeted factory overhead per direct labor hour = 115000/8000
Total budgeted factory overhead per direct labor hour = 14.38
1) $14.38.