The direct labor budget of Yuvwell Corporation for the upcoming fiscal year cont

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 $3.25 per direct labor-hour and its total fixed manufacturing overhead is $48,000 per quarter. The only noncash item included in fixed manufacturing overhead is depreciation, which is $16,000 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.

Compute the company’s predetermined overhead rate (including both variable and fixed manufacturing overhead) for the upcoming fiscal year. (Round your answer to 2 decimal places.)

Compute the company’s predetermined overhead rate (including both variable and fixed manufacturing overhead) for the upcoming fiscal year. (Round your answer to 2 decimal places.)

Explanation / Answer

1 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter year Variable manufacturing overhead 26000 26650 27625 25350 105625 Fixed manufacturing overhead 48000 48000 48000 48000 192000 Total manufacturing overhead 74000 74650 75625 73350 297625 Less depreciation 16000 16000 16000 16000 64000 Cash disbursements for manufacturing overhead 58000 58650 59625 57350 233625 2 Predetermined overhead rate for the year = 297625/32500= 9.16

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