The Covey Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter of the year. The budgeted variable manufacturing overhead rate is $4.00 per direct labor-hour; the budgeted fixed manufacturing overhead is $64,000 per month, of which $18,000 is factory depreciation
-If the budgeted cash disbursements for manufacturing overhead for November are $90,000, then the budgeted direct labor-hours for November must be:

Question

Quizplus · Accepted Answer

To find the budgeted direct labor-hours for November, we need to calculate the total manufacturing overhead and subtract the fixed overhead to find the variable overhead. The cash disbursements for manufacturing overhead are $90,000. The fixed manufacturing overhead is $64,000, but only $46,000 is cash (since $18,000 is depreciation). Therefore, the variable overhead is $90,000 - $46,000 = $44,000. With a variable rate of $4.00 per direct labor-hour, the budgeted direct labor-hours are $44,000 / $4.00 = 11,000 direct labor-hours.

The Covey Corporation Is Preparing Its Manufacturing Overhead Budget for the Fourth