Question

he direct labor budget of Yuvwell Corporation for the upcoming fiscal year contains the following details concerning budgeted direct labor-hours: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Budgeted direct labor-hours 8,800 8,600 8,900 8,300 The company uses direct labor-hours as its overhead allocation base. The variable portion of its predetermined manufacturing overhead rate is $3.00 per direct labor-hour and its total fixed manufacturing overhead is $56,000 per quarter. The only noncash item included in fixed manufacturing overhead is depreciation, which is $14,000 per quarter. Required: 1. Prepare the company’s manufacturing overhead budget for the upcoming fiscal year. 2. Compute the company’s predetermined overhead rate (including both variable and fixed manufacturing overhead) for the upcoming fiscal year

Answer 1

• Requirement 1

		Q1	Q2	Q3	Q4	Year
A	Budgeted DLHs	8800	8600	8900	8300	34600
B	Variable overhead rate per DLH	$3.00	$3.00	$3.00	$3.00	$3.00
C = A x B	Budgeted variable overhead	$26,400	$25,800	$26,700	$24,900	$103,800
D	Budgeted fixed overheads	$56,000	$56,000	$56,000	$56,000	$224,000
E = C+D	Budgeted manufacturing overheads	$82,400	$81,800	$82,700	$80,900	$327,800

• Requirement 2

Variable Overhead rate	$3.00
Fixed Overhead rate ($224000 / 34600 DLHs)	$6.47
Predetermined Overhead rate	$9.47