The manufacturing overhead budget at Franklyn Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 2,500 direct labor-hours will be required in January. The variable overhead rate is $4 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $43,090 per month, which includes depreciation of $3,670. All other fixed manufacturing overhead costs represent current cash flows. The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

Question

John Ruiz

Business

1 January, 17:31

The manufacturing overhead budget at Franklyn Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 2,500 direct labor-hours will be required in January. The variable overhead rate is $4 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $43,090 per month, which includes depreciation of $3,670. All other fixed manufacturing overhead costs represent current cash flows. The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

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Danielle Hall · Answer 1

Cash disbursement = $49,420

Explanation:

Giving the following information:

Direct labor hours = 2,500 hours

The variable overhead rate is $4 per direct labor-hour.

The company's budgeted fixed manufacturing overhead is $43,090 per month, which includes depreciation of $3,670.

We need to calculate the cash disbursements, the depreciation expense does not represent a cash disbursement.

Cash disbursement = (43,090 - 3,670) + (2,500*4) = $49,420