Question

The manufacturing overhead budget at Polich Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 7,500 direct labor-hours will be required in February. The variable overhead rate is $8.40 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $110,250 per month, which includes depreciation of $18,090. All other fixed manufacturing overhead costs represent current cash flows.

The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:__________.
A. $80,910
B. $168,820
C. $87,910
D. $187,050

Answer 1

Total overhead cash disbursement= $155,160

Step-by-step explanation:

Giving the following information:

The direct labor budget indicates that 7,500 direct labor-hours will be required in February. The variable overhead rate is $8.40 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $110,250 per month, which includes depreciation of $18,090.

First, we need to calculate the allocated variable overhead:

Variable overhead= 7,500*8.4= 63,000

Depreciation is not a cash disbursement:

Fixed overhead= 110,250 - 18,090= 92,160

Total overhead cash disbursement= 63,000 + 92,160= $155,160