Question

# The direct labor budget of Yuvwell Corporation for the upcoming fiscal year contains the following details...

The 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 10,200 9,300 9,600 10,400

The company uses direct labor-hours as its overhead allocation base. The variable portion of its predetermined manufacturing overhead rate is \$4.75 per direct labor-hour and its total fixed manufacturing overhead is \$70,000 per quarter. The only noncash item included in fixed manufacturing overhead is depreciation, which is \$17,500 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.

1. Prepare the company’s manufacturing overhead budget for the upcoming fiscal year.

 1st quarter 2nd quarter 3rd quarter 4th quarter Year Budgeted direct labour hour 10200 9300 9600 10400 39500 variable overhead rate 4.75 4.75 4.75 4.75 4.75 Variable manufacturing overhead 48450 44175 45600 49400 187625 Fixed manufacturing overhead 70000 70000 70000 70000 280000 Total manufacturing overhead 118450 114175 115600 119400 467625 Less: Depreciation -17500 -17500 -17500 -17500 -70000 Cash disbursement on manufacturing overhead 100950 96675 98100 101900 397625

2) Predetermine overhead rate = 467625/39500 = \$11.84 per labour hour

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