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 which includes depreciation of S19,780. All other fixed manufacturing overhead costs represent current cash flows. The September direct labor budget indicates that 8,600 direct labor-hours will be required in that month Required a. Determine the cash disbursement for manufacturing overhead for September. b. Determine the predetermined overhead rate for September. TT! Paragraph: Arial 3(12pt) : :-·-·T· ..g i

Explanation / Answer

a) DETERMINE CASH DISBURSEMENT FOR MANUFACTURING OVERHEAD FOR SEPTEMBER :

1.30 per labour hour

b) Predetermine overhead rate = Total manufacturing overhead/Total labour hours

                                            = 110080/8600

Predetermine overhead rate = 12.80 per labour hour

September manufacturing overhead Direct labour hours required 8600 Variable overhead rate

1.30 per labour hour

Variable manufacturing overhead 11180 Fixed manufacturing overhead 98900 Total manufacturing overhead 110080 Less: depreciation (19780) Cash disbursement for manufacturing overhead 90300

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