Question

Haylock Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 8,400 direct labor-hours will be required in August. The variable overhead rate is $1.30 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $100,470 per month, which includes depreciation of $8,880. All other fixed manufacturing overhead costs represent current cash flows. The August cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:
A. $10,920
B. $102,510
C. $91,590
D. $111,390

Answer 1

Answer:

Total cash disbursement August= $102,510

Explanation:

Giving the following formula:

Direct labor hours= 8,400

Variable overhead rate= $1.30 per direct labor-hour.

Fixed overhead= 100,470 - 8,880= $91,590

Depreciation expense is not a cash disbursement cost.

We need to calculate the cash disbursement for August:

Total variable overhead= 8,400*1.3= 10,920

Total fixed overhead= 91,590

Total cash disbursement August= $102,510