Channing Company Channing Company is preparing its Manufacturing Overhead budget for the second quarter of the year.Budgeted variable factory overhead is $3.00 per unit produced; budgeted fixed factory overhead is $75,000 per month,with $16,000 of this amount being factory depreciation.
Refer to Channing Company.If the budgeted cash disbursements for factory overhead for June are $80,000,then the budgeted production for June must be:

Question

Quizplus · Accepted Answer

The budgeted cash disbursements for factory overhead exclude non-cash items like depreciation. Therefore, the cash disbursements for June are $80,000 - $16,000 = $64,000. The fixed cash overhead is $75,000 - $16,000 = $59,000. The variable overhead is $3 per unit. So, $64,000 - $59,000 = $5,000 is the variable overhead, which means $5,000 / $3 per unit = 1,667 units. Adding the fixed overhead units, the total production is 7,000 units.

Channing Company Channing Company Is Preparing Its Manufacturing Overhead Budget