Mccoo Inc. bases its manufacturing overhead budget on budgeted direct labor-hour

Question

Mccoo Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The variable overhead rate is $1.50 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $117,000 per month, which includes depreciation of $19,690. All other fixed manufacturing overhead costs represent current cash flows. The November direct labor budget indicates that 9.000 direct labor-hours will be required in that month. Required: Determine the cash disbursement for manufacturing overhead for November. Determine the predetermined overhead rate for November.

Explanation / Answer

Cash disbursement for manufacturing overhead =$110,810

=fixed manufacturing ovehead $117,000 - $19,690 = $97,310 + Variable overhead 1.5*9000 = $110,810

B) Predetermined overhead rate = $117,000/9000 + 1.5 = $14.5

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