The manufacturing overhead budget at Cardera Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 2,300 direct labor-hours will be required in January. The variable overhead rate is $1.00 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $28,060 per month, which includes depreciation of $4,600. All other fixed manufacturing overhead costs represent current cash flows. The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:
A)$30,360
B)$2,300
C)$23,460
D)$25,760

Question

Quizplus · Accepted Answer

The total budgeted manufacturing overhead for January can be calculated as follows:
Variable overhead = Variable overhead rate x Direct labor hours
= $1.00 x 2,300
= $2,300

Fixed overhead = Budgeted fixed manufacturing overhead - Depreciation
= $28,060 - $4,600
= $23,460

Total budgeted manufacturing overhead = Variable overhead + Fixed overhead
= $2,300 + $23,460
= $25,760

Therefore, the January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be $25,760. Option D is the correct choice.

The Manufacturing Overhead Budget at Cardera Corporation Is Based on Budgeted