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Nostrana [21]
3 years ago
10

he manufacturing overhead budget at Franklyn Corporation is based on budgeted direct labor-hours. The direct labor budget indica

tes that 3,000 direct labor-hours will be required in January. The variable overhead rate is $5 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $43,140 per month, which includes depreciation of $3,620. All other fixed manufacturing overhead costs represent current cash flows. The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:
Business
2 answers:
Fofino [41]3 years ago
6 0

Answer:

To calculate the total cash disbursement for manufacturing overhead, take the total manufacturing overhead cost less depreciation.

Total manufacturing overhead cost

= Variable costs + Fixed costs

= (direct labor hours x rate per direct labor hour) + Fixed costs

= (3000 x $5) + $43140

= $15000 + $43140

= $58140

Cash disbursement cost

= Total manufacturing overhead cost - depreciation

= $58140 - $3620

= $54520

The January cash disbursement for manufacturing overhead is $54520.

Explanation:

A few key points to remember:

Fixed manufacturing overhead cost is all the costs of production which stay constant such rent, depreciation, etc. In other words components in the manufacturing process which stay constant.

Variable cost is based on the number of direct labor hours and the rate allocated per direct labor hour.

When calculating the cash disbursement, depreciation is taken out as a fixed component from the total manufacturing cost as it is not a cash outlay even though it is a fixed cost. Hence cash disbursement is calculated on the total manufacturing overhead less depreciation.

Fudgin [204]3 years ago
3 0

Answer:

$54 520

Explanation:

Calculations as follows

Direct labor budgeted hours  3000

The variable manufacturing overhead $5 per hour

The total variable manufacturing costs

3000*$5=$15 000

Fixed overhead manufacturing overhead cost given

$43140

but included depreciation and depreciation is a non cash expense so should be deducted as the goal is to calculate cash

43140-$3620=$39520

So the total cash disbursement for manufacturing overhead budget is

$15000+$39520=$54 520

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