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22 December, 02:05

The manufacturing overhead budget at Rost Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 2,800 direct labor-hours will be required in September. The variable overhead rate is $7.00 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $43,120 per month, which includes depreciation of $3,640. All other fixed manufacturing overhead costs represent current cash flows. The September cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

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  1. 22 December, 02:34
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    Total overhead cash disbursement = $59,080

    Explanation:

    Giving the following information:

    Estimated direct labor hours = 2,800

    The variable overhead rate is $7.00 per direct labor-hour.

    Estimated fixed manufacturing overhead = $43,120 per month

    Includes depreciation of $3,640

    To calculate the cash disbursement, we need to deduct from the fixed manufacturing overhead the depreciation expense because it is not a cash disbursement.

    Variable overhead = 7*2,800 = 19,600

    Fixed overhead = 43,120-3,640 = 39,480

    Total overhead cash disbursement = $59,080
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