Question

Beach Runner makes running shoes and they are anticipating the incurrence of the following manufacturing overhead costs during the upcoming year: Cost Indirect materials...........$4,000 Indirect Labor .......................$70,000 Utilities...................................$42,000 Insurance.................................$7,000 Taxes.........................................$9,000 Depreciation on equipment $20,000 What will Beach Runner budget for cash disbursements related to manufacturing overhead? (1 Point)

Answer 1

Answer:

Beach Runner

Manufacturing Overhead Budget for Cash Disbursements:

Indirect materials = $4,000

Indirect labor = $70,000

Utilities = $42,000

Insurance = $7,000

Taxes = $9,000

Total = $132,000

Explanation:

Cash disbursement will not be incurred in respect of Depreciation on equipment.  This is why depreciation is excluded.

Depreciation of a capital asset is not a cash flow item.  Depreciation is an accounting technique or measure used to spread the cost of a capital asset over its useful life in accordance with the matching principle.