The direct labor budget of Yuvwell Corporation for the upcoming fiscal year cont
ID: 2558892 • Letter: T
Question
The direct labor budget of Yuvwell Corporation for the upcoming fiscal year contains the following details concerning budgeted direct labor-hours: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Budgeted direct labor-hours 12,000 10,200 10,500 11,300 The company uses direct labor-hours as its overhead allocation base. The variable portion of its predetermined manufacturing overhead rate is $7.00 per direct labor-hour and its total fixed manufacturing overhead is $88,000 per quarter. The only noncash item included in fixed manufacturing overhead is depreciation, which is $22,000 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.
Explanation / Answer
1. Prepare the company’s manufacturing overhead budget for the upcoming fiscal year.
2) Predetermine overhead rate = 660000/44000 = 15 per labour hour
1st quarter 2nd quarter 3rd quarter 4th quarter Year Budgeted direct labour hour 12000 10200 10500 11300 44000 Variable overhead rate per labour hour 7 7 7 7 7 Variable manufacturing overhead 84000 71400 73500 79100 308000 Fixed manufacturing overhead 88000 88000 88000 88000 352000 Total manufacturing overhead 172000 159400 161500 167100 660000 Less: Depreciation (22000) (22000) (22000) (22000) (88000) Cash disbursement for manufacturing overhead 150000 137400 139500 145100 572000