Question

The manufacturing overhead budget at Polich Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 8,800 direct labor-hours will be required in February. The variable overhead rate is $9.20 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $109,120 per month, which includes depreciation of $18,240. All other fixed manufacturing overhead costs represent current cash flows. The February cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

Answer 1

Answer:

$171,840

Explanation:

To reach the number, we first add up variable manufacturing overhead and fixed overhead, and then, substract depreciation.

February

Budgeted direct labor hours                                   8,800

Variable overhead rate per direct labor hour        $9.20

Variable manufacturing overhead                          $80,960

Fixed manufacturing overhead                               $109,120

Total manufacturing overhead                                $190,080

Less depreciation                                                    ($18,240)

Cash disbursement for manufacturing overhead  $171,840