Question

The manufacturing overhead budget of Paparella Corporation is based on budgeted direct labor-hours. The November direct labor budget indicates that 6,000 direct labor-hours will be required in that month. The variable overhead rate is $2.00 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $79,200 per month, which includes depreciation of $21,000. All other fixed manufacturing overhead costs represent current cash flows.
Required:A. Determine the cash disbursements for manufacturing overhead for November.B. Determine the predetermined overhead rate for November.

Answer 1

Answer:

The answer for question A is $ 70,200

The answer for question B is $ 15.20

Explanation:

A.

 Budgeted direct labor hours = 6,000  hours

Variable overhead rate = $2.00

Variable manufacturing overheads = 6000 x $2 = $ 12,000

Fixed manufacturing overhead = $ 79,200

Total Manufacturing overheads = $ 91,200

Depreciation = $ 21,000

Cash disbursement of manufacturing overhead for November = total manufacturing overheads - Depreciation

= $91,200 - $ 21,000 = $ 70,200

B.

From above, we have  Total Manufacturing overheads = $ 91,200

Budgeted direct labor hours = 6,000  hours

Predetermined overhead rate for the month of November = Total Manufacturing overheads ÷ Budgeted direct labor hours

= $91,200 ÷ 6000 = $ 15.20