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 direct labor time for December is 8,000 hours,then average budgeted manufacturing overhead per direct labor-hour is closest to:

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 direct labor time for December is 8,000 hours,then average budgeted manufacturing overhead per direct labor-hour is closest to:

Quizplus · Accepted Answer

Budgeted manufacturing overhead = $75,000 + ($5.00 per direct labor-hour × 8,000 direct labor-hours)
= $75,000 + $40,000 = $115,000
Average budgeted manufacturing overhead per unit = $115,000 ÷ 8,000 per direct labor-hour
= $14.375 per direct labor-hour

Acti Manufacturing Corporation Is Estimating the Following Raw Material Purchases