The direct labor budget of Yuvwell Corporation for the upcoming fiscal year cont
ID: 2553041 • Letter: T
Question
The direct labor budget of Yuvwell Corporation for the upcoming fiscal year contains the following details concerning budgeted direct labor-hours:
The company uses direct labor-hours as its overhead allocation base. The variable portion of its predetermined manufacturing overhead rate is $2.50 per direct labor-hour and its total fixed manufacturing overhead is $52,000 per quarter. The only noncash item included in fixed manufacturing overhead is depreciation, which is $13,000 per quarter.
Required:
1. Prepare the company’s manufacturing overhead budget for the upcoming fiscal year.
2. Compute the company’s predetermined overhead rate (including both variable and fixed manufacturing overhead) for the upcoming fiscal year.
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Budgeted direct labor-hours 8,400 8,400 8,700 8,100Explanation / Answer
1. Prepare the company’s manufacturing overhead budget for the upcoming fiscal year.
2
Predetermined overhead rate =Estimated overhead cost/Estimated Direct Labor Hr
=292000/33600
=$8.69 per unit
Manufactuing overhead Cash Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Budgeted direct labor-hours 8,400 8,400 8,700 8,100 33,600 variable portion of its predetermined manufacturing overhead rate 2.5 2.5 2.5 2.5 company’s manufacturing overhead Variable A 21000 21000 21750 20250 84000 Fixed B 52000 52000 52000 52000 208000 Total manufacturing overhead A+B 73000 73000 73750 72250 292000 Less Depreciation 13000 13000 13000 13000 52000 Cash Disbursment for Manufactuing overhead 60000 60000 60750 59250 240000