Cartier Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The variable overhead rate is $5.80 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $39,930 per month, which includes depreciation of $12,870. All other fixed manufacturing overhead costs represent current cash flows. The direct labor budget indicates that 3,300 direct labor-hours will be required in April. The April cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

Question

Quizplus · Accepted Answer

The cash disbursements for manufacturing overhead include variable overhead and cash-based fixed overhead. Variable overhead is $5.80 per hour for 3,300 hours, totaling $19,140. Fixed overhead cash flows are $39,930 - $12,870 (depreciation), totaling $27,060. Adding these gives $46,200.