The manufacturing overhead budget at Waycaster Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 6,000 direct labor-hours will be required in February. The variable overhead rate is $3.40 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $81,600 per month, which includes depreciation of $18,000. All other fixed manufacturing overhead costs represent current cash flows.
-The February cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

Question

Quizplus · Accepted Answer

Calculation for predetermined overhead rate:

Variable overhead cost = Direct labor-hours × Variable overhead rate
Variable overhead cost = 6,000 hours × $3.40/hour
Variable overhead cost = $20,400

Total manufacturing overhead cost = Fixed manufacturing overhead + Variable manufacturing overhead
Total manufacturing overhead cost = $81,600 + $20,400
Total manufacturing overhead cost = $102,000

Therefore, the cash disbursements for manufacturing overhead in February would be $84,000 ($81,600 fixed overhead + $2,400 variable overhead cash disbursement). However, this is not one of the answer choices. The closest answer choice is D, which is $102,000. It includes both fixed and variable overhead costs.

The Manufacturing Overhead Budget at Waycaster Corporation Is Based on Budgeted