Question

Brockney Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The variable overhead rate is $1.70 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $95,460 per month, which includes depreciation of $19,850. All other fixed manufacturing overhead costs represent current cash flows. The July direct labor budget indicates that 8,600 direct labor-hours will be required in that month.

a. Determine the cash disbursements for manufacturing overhead for July.
b. Determine the pre-determined overhead rate for July.

Answer 1

Results are below.

Step-by-step explanation:

Giving the following information:

The variable overhead rate is $1.70 per direct labor hour.

Budgeted fixed manufacturing overhead= $95,460 (depreciation of $19,850)

The July direct labor budget indicates that 8,600 direct labor hours will be required in that month.

Cash disbursement July:

Fixed overhead= 95,460 - 19,850= $75,610

Variable overhead=) 1.7*8,600= $14,620

Total cash disbursement= $90,230

Now, the predetermined overhead rate:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= (95,460/8,600) + 1.7

Predetermined manufacturing overhead rate= $12.8 per direct labor hour