Asked by Anh Thy Nguy?n Ng?c on May 22, 2024
Verified
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 $5 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $43,010 per month, which includes depreciation of $3,750. 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) $55,510
B) $12,500
C) $51,760
D) $39,260
Variable Overhead Rate
The rate at which variable overhead costs are applied to a product based on a specific activity or driver.
Direct Labor-Hours
The total hours worked directly on manufacturing a product or providing a service.
- Comprehend the process for creating a manufacturing overhead budget, including the distinction between variable and fixed costs.
Verified Answer
SP
Steven PondelMay 22, 2024
Final Answer :
C
Explanation :
Variable overhead cost = Variable overhead rate × Direct labor-hours
= $5 × 2,500 = $12,500
Fixed overhead cost = Budgeted fixed manufacturing overhead - Depreciation
= $43,010 - $3,750 = $39,260
Total manufacturing overhead cost = Variable overhead cost + Fixed overhead cost
= $12,500 + $39,260 = $51,760
Therefore, the January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be $51,760.
= $5 × 2,500 = $12,500
Fixed overhead cost = Budgeted fixed manufacturing overhead - Depreciation
= $43,010 - $3,750 = $39,260
Total manufacturing overhead cost = Variable overhead cost + Fixed overhead cost
= $12,500 + $39,260 = $51,760
Therefore, the January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be $51,760.
Learning Objectives
- Comprehend the process for creating a manufacturing overhead budget, including the distinction between variable and fixed costs.
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