Avril Incorporated bases its manufacturing overhead budget on budgeted direct labor-hours. The variable overhead rate is $4.60 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $54,080 per month, which includes depreciation of $3,840. All other fixed manufacturing overhead costs represent current cash flows. The direct labor budget indicates that 3,200 direct labor-hours will be required in October.The October cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

Question

Quizplus · Accepted Answer

Fixed Manufacturing Overhead = $54,080 per month
Depreciation = $3,840 per month
Total Fixed Manufacturing Overhead excluding depreciation = $54,080 - $3,840 = $50,240 per month

Therefore, the total manufacturing overhead budget for October is calculated as follows:
Total Manufacturing Overhead = Variable Manufacturing Overhead + Fixed Manufacturing Overhead
Total Manufacturing Overhead = ($4.60 per DLH x 3,200 DLH) + $50,240
Total Manufacturing Overhead = $14,720 + $50,240
Total Manufacturing Overhead = $64,960

Hence, the cash disbursement for manufacturing overhead in October will be $64,960, which is option B.

Avril Incorporated Bases Its Manufacturing Overhead Budget on Budgeted Direct