Davis Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter of the year. The budgeted variable manufacturing overhead rate is $1.70 per direct labor-hour; the budgeted fixed manufacturing overhead is $116,000 per month, of which $30,000 is factory depreciation. If the budgeted direct labor time for November is 7,000 hours, then the total budgeted cash disbursements for manufacturing overhead for November must be:

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Business

Kole Malone

17 May, 19:57

Davis Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter of the year. The budgeted variable manufacturing overhead rate is $1.70 per direct labor-hour; the budgeted fixed manufacturing overhead is $116,000 per month, of which $30,000 is factory depreciation. If the budgeted direct labor time for November is 7,000 hours, then the total budgeted cash disbursements for manufacturing overhead for November must be:

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Gabrielle Monroe · Answer 1

The total budgeted cash disbursements for manufacturing overhead for November must be $97,900

Explanation:

The steps to compute the total budgeted cash disbursements is shown below:

Step 1 : Calculation of fixed manufacturing overhead without considering depreciation

= Fixed manufacturing overhead - Depreciation

= $116,000 - $30,000

= $86,000

Step 2 : Now calculate the budgeted variable manufacturing cost

= Budgeted direct labor hours * overhead rate

= 7,000 * $1.70

= $11,900

Step 3 : Add Step 1 and Step 2

So, $86000 + $11,900 = $97,900

Hence, the total budgeted cash disbursements for manufacturing overhead for November must be $97,900