Acti Manufacturing Corporation is estimating the following raw material purchases for the final four months of the year:
At Acti, 40% of raw materials purchases are normally paid for in the month of purchase. The remaining 60% is paid for in the month following the purchase.
-If the budgeted cash disbursements for manufacturing overhead for December total $105,000,then the budgeted direct labor-hours for December must be:

Question

Acti Manufacturing Corporation is estimating the following raw material purchases for the final four months of the year:
  At Acti, 40% of raw materials purchases are normally paid for in the month of purchase. The remaining 60% is paid for in the month following the purchase.
-If the budgeted cash disbursements for manufacturing overhead for December total $105,000,then the budgeted direct labor-hours for December must be:

Quizplus · Accepted Answer

Budgeted cash disbursements = ($75,000 - $15,000) + ($5.00 per direct labor-hour × X)
$105,000 = ($75,000 - $15,000) + ($5.00 per direct labor-hour × X)
$105,000 = $60,000 + ($5.00 per direct labor-hour × X)
$5.00 per direct labor-hour × X = $45,000
X = $45,000 ÷ $5.00 per direct labor-hour
X = 9,000 direct labor-hours

Acti Manufacturing Corporation Is Estimating the Following Raw Material Purchases