Question

The manufacturing overhead budget at Polich Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 8,800 direct labor-hours will be required in February. The variable overhead rate is $9.20 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $109,120 per month, which includes depreciation of $18,240. All other fixed manufacturing overhead costs represent current cash flows. The February cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

Answer 1

$171,840

Step-by-step explanation:

To reach the number, we first add up variable manufacturing overhead and fixed overhead, and then, substract depreciation.

February

Budgeted direct labor hours 8,800

Variable overhead rate per direct labor hour $9.20

Variable manufacturing overhead $80,960

Fixed manufacturing overhead $109,120

Total manufacturing overhead $190,080

Less depreciation ($18,240)

Cash disbursement for manufacturing overhead $171,840