The manufacturing overhead budget at Polich Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 1,600 direct labor-hours will be required in February. The variable overhead rate is $3.40 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $28,320 per month, which includes depreciation of $3,680. All other fixed manufacturing overhead costs represent current cash flows.The February cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

Question

Quizplus · Accepted Answer

Variable manufacturing overhead for February = 1,600 direct labor-hours x $3.40 per direct labor-hour = $5,440

Fixed manufacturing overhead for February = $28,320 (including depreciation)

Total manufacturing overhead for February = Variable manufacturing overhead + Fixed manufacturing overhead = $5,440 + $28,320 = $33,760

However, the question is asking for cash disbursements, not total manufacturing overhead. Since depreciation is a non-cash expense, we need to subtract it from the fixed manufacturing overhead budget to find the cash disbursement for February:

Cash disbursement for February = Variable manufacturing overhead + (Fixed manufacturing overhead - Depreciation) = $5,440 + ($28,320 - $3,680) = $30,080

Therefore, the correct answer is C.

The Manufacturing Overhead Budget at Polich Corporation Is Based on Budgeted