Question

The direct labor budget of Yuvwell Corporation for the upcoming fiscal year contains the following details concerning budgeted direct labor-hours:

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Budgeted direct labor-hours 8,400 8,400 8,700 8,100
The company's variable manufacturing overhead rate is $2.50 per direct labor-hour and the company's fixed manufacturing overhead is $52,000 per quarter. The only noncash item included in fixed manufacturing overhead is depreciation, which is $13,000 per quarter.
Required:
Complete the company's manufacturing overhead budget for the upcoming fiscal year.

Answer 1

To complete Yuvwell Corporation's manufacturing overhead budget, we calculate variable overheads for each quarter by multiplying direct labor-hours by $2.50 and add a fixed overhead of $52,000 per quarter. The total manufacturing overhead for the year is $292,000.

Step-by-step explanation:

The manufacturing overhead budget is composed of both variable and fixed costs that Yuvwell Corporation expects to incur in relation to the direct labor hours required for production during the fiscal year. Below is the breakdown:

Variable Manufacturing Overhead: This is determined by multiplying the budgeted direct labor-hours by the variable overhead rate of $2.50 per hour.

Fixed Manufacturing Overhead: This is a constant $52,000 per quarter, including a non-cash item of depreciation which is $13,000 every quarter.

Calculations for each quarter:

1st Quarter: (8,400 hours x $2.50) + $52,000 = $21,000 (variable) + $52,000 (fixed) = $73,000 total

2nd Quarter: (8,400 hours x $2.50) + $52,000 = $21,000 (variable) + $52,000 (fixed) = $73,000 total

3rd Quarter: (8,700 hours x $2.50) + $52,000 = $21,750 (variable) + $52,000 (fixed) = $73,750 total

4th Quarter: (8,100 hours x $2.50) + $52,000 = $20,250 (variable) + $52,000 (fixed) = $72,250 total

The total manufacturing overhead budget for the fiscal year is the sum of all four quarters, which equals $292,000.