Question

Shuck Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 8,100 direct labor-hours will be required in May. The variable overhead rate is $1.40 per direct labor hour. The company's budgeted fixed manufacturing overhead is $100,440 per month, which includes depreciation of $8,910. 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

May cash disbursement is $102,870

Step-by-step explanation:

May cash disbursement for manufacturing overhead is the planned cash expenditure based on the budgeted manufacturing overhead for the month.

Cash would be paid to labor at $1.40 for every direct labor incurred for a total number of 8,100 direct labor hours i.e $11,340 cash in all($1.40*8100)

Also,company budgeted fixed manufacturing overhead would also require $91,530 in cash,which is the budgeted manufacturing fixed overhead of $100,440 minus the depreciation charge included in it ($100,440-$91530)

In total cash disbursement is $102,870($11,340+$91,530)