Davey Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter of the year. The budgeted variable manufacturing overhead rate is $3.00 per direct labor-hour; the budgeted fixed manufacturing overhead is $66,000 per month, of which $10,000 is factory depreciation.
-If the budgeted direct labor time for November is 9,000 hours, then the total budgeted cash disbursements for manufacturing overhead for November must be:

Question

Quizplus · Accepted Answer

To calculate the budgeted cash disbursements for manufacturing overhead, we need to multiply the budgeted direct labor hours by the predetermined overhead rate. Let's assume the predetermined overhead rate is $9 per direct labor hour. Therefore, the budgeted cash disbursements for November will be:
$9 x 9,000 hours = $81,000
However, we also need to account for any under- or overapplied overhead from previous months. If there is an overapplied overhead, then we subtract it from the budgeted cash disbursements, and if there is an underapplied overhead, then we add it to the budgeted cash disbursements. Since no information is given about under- or overapplied overhead, we can assume it is not relevant to this problem. Therefore, the best choice is B, $83,000.

Davey Corporation Is Preparing Its Manufacturing Overhead Budget for the Fourth