Question

The manufacturing overhead budget at Franklyn Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 3,800 direct labor-hours will be required in January. The variable overhead rate is $6 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $43,220 per month, which includes depreciation of $3,540. All other fixed manufacturing overhead costs represent current cash flows. The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

Answer 1

The correct answer is $62,480.

Step-by-step explanation:

According to the scenario, the computation of the given data are as follows:

Fixed manufacturing overhead = $43,220

Depreciation = $3,540

Variable overhead rate = $6

Direct labor hours = 3,800

So, variable manufacturing overhead = $6 × 3,800 = 22,800

So, we can calculate the January cash disbursement by using following formula:

January cash disbursement = Fixed manufacturing overhead - Depreciation + variable manufacturing overhead

= $43,220 - $3,540 + 22,800

= $62,480