Question

Davol Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter of the year. The budgeted variable manufacturing overhead rate is $6.80 per direct labor hour; the budgeted fixed manufacturing overhead is $72,000 per month, of which $20,000 is factory depreciation.

If the budgeted direct labor time for October is 5,000 hours, then the total budgeted manufacturing overhead for October is:
A) $52,000
B) $106,000
C) $54,000
D) $86,000

Answer 1

B. $106,000

Step-by-step explanation:

Total budgeted manufacturing overhead for October = Budgeted variable manufacturing overhead + Budgeted fixed manufacturing overhead

Total budgeted manufacturing overhead for October = ($6.8 × 5,000 hours) + $72,000

Total budgeted manufacturing overhead for October = $106,000