Question

The manufacturing overhead budget at Rost Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 3,600 direct labor-hours will be required in September. The variable overhead rate is $7.8 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $51,120 per month, which includes depreciation of $4,440. All other fixed manufacturing overhead costs represent current cash flows. The September cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

Answer 1

$74,760

Step-by-step explanation:

The computation of the cash disbursements for manufacturing overhead is shown below:

September cash disbursement = company's budgeted fixed manufacturing overhead - depreciation expenses + variable manufacturing overhead

where,

Variable manufacturing overhead is

= 3,600 direct labor hours × $7.8

= $28,080

So, the cash disbursement is

= $51,120 - $4,440 + $28,080

= $74,760

We simply applied the above formula so that the cash disbursement could arrive