Question

Overhead expenses are budgeted at $2,000 per month. Included in the $2,000 are $500 of monthly depreciation expense and $200 of allocated expenses related to the insurance premium that is paid in September. What is the cash outflow for overhead for the month of May

Answer 1

Answer:

$1,300

Explanation:

Given that,

Budgeted Overhead expenses = $2,000 per month

monthly depreciation expense = $500

Allocated expenses related to the insurance premium = $200

Non-cash expenses:

= monthly depreciation expense + Allocated expenses related to the insurance premium

= $500 + $200

= $700

Cash outflow for overhead for the month of May:

= Budgeted Overhead expenses - Non-cash expenses

= $2,000 - $700

= $1,300