Question

The manufacturing overhead budget at Keliey. mv is based on budgeted direct labor-houts. The direct labor budget indicates that 7.600 direct labor-hours will be required in March. The variable overhead rate is $2000 per direct labor houg. The company's budgeted fred manufacturing overhead is $129.000 per month which includes depreciation of 56000 . All other fixed manufscturing overhead costs represent current cash flowi The March cash disbursements for manifacturing overhesd on the manufacturing overhead budget should be

Answer 1

The March cash disbursements for manufacturing overhead on the budget, excluding depreciation, equals $73,000, which only includes current cash flows, as depreciation is a non-cash expense.

Step-by-step explanation:

To calculate the March cash disbursements for manufacturing overhead on the budget, we must consider both variable overhead and fixed manufacturing overhead costs, excluding depreciation as it does not represent current cash flow.

The variable overhead is based on the direct labor hours; therefore we multiply the variable overhead rate ($2,000 per direct labor-hour) by the total number of budgeted direct labor-hours (7,600) to determine the total variable overhead cost.

Next, we consider fixed manufacturing overhead costs, which are $129,000 per month. Since depreciation is $56,000 and is a non-cash expense, we exclude it from the cash disbursement calculation.

The March cash disbursements for manufacturing overhead will be:

• Fixed manufacturing overhead (excluding depreciation): $129,000 - $56,000 = $73,000
• Variable manufacturing overhead: $2,000 x 7,600 = $15,200,000
• Total March cash disbursements for manufacturing overhead: $73,000