Question

Trini Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 9,800 direct labor-hours will be required in May. The variable overhead rate is $3.10 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $117,440 per month, which includes depreciation of $10,610. All other fixed manufacturing overhead costs represent current cash flows. The May cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

Answer 1

Total overhead= $137,210

Step-by-step explanation:

First, we need to deduct the depreciation expense from the fixed overhead. Depreciation is not a cash cost.

Fixed overhead= 117,440 - 10,610= $106,830

Now, the cash disbursement for total overhead:

Variable overhead= 3.1*9,800= 30,380

Fixed overhead= 106,830

Total overhead= $137,210