Dano Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The variable overhead rate is $1.50 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $110,200 per month, which includes depreciation of $28,880. All other fixed manufacturing overhead costs represent current cash flows. The direct labor budget indicates that 7,600 direct labor-hours will be required in December.
-The December cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

Question

Quizplus · Accepted Answer

The variable overhead for December is $1.50 per direct labor-hour x 7,600 direct labor-hours = $11,400. The fixed overhead is $110,200 - $28,880 = $81,320. The total cash disbursements for manufacturing overhead are $11,400 + $81,320 = $92,720.

Dano Inc Bases Its Manufacturing Overhead Budget on Budgeted Direct Labor-Hours