Question

The manufacturing overhead budget at Foshay Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 6,300 direct labor-hours will be required in May. The variable overhead rate is $8.70 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $117,180 per month, which includes depreciation of $24,940. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for May should be:

Multiple Choice

• $23.80

• $8.70

• $18.60

• $27.30

Haylock Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 8,300 direct labor-hours will be required in August. The variable overhead rate is $1.40 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $100,320 per month, which includes depreciation of $9,030. All other fixed manufacturing overhead costs represent current cash flows. The August cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

Multiple Choice

• $111,940

• $102,910

• $11,620

• $91,290

Schuepfer Inc. bases its selling and administrative expense budget on budgeted unit sales. The sales budget shows 1,800 units are planned to be sold in March. The variable selling and administrative expense is $4.90 per unit. The budgeted fixed selling and administrative expense is $35,680 per month, which includes depreciation of $3,300 per month. The remainder of the fixed selling and administrative expense represents current cash flows. The cash disbursements for selling and administrative expenses on the March selling and administrative expense budget should be:

Multiple Choice

• $8,820

• $44,500

• $41,200

• $32,380

Answer 1

1) Predetermine overhead rate = (117180/6300)+8.70 = 27.30 per labor hour

So answer is d) $27.30

2) Cash disbursement

Budgeted labor hour	8300
variable overhead rate	1.4
Budgeted variable overhead	11620
Fixed overhead	100320
Total overhead	111940
Less: Depreciation	-9030
Cash disbursement on manufacturing overhead	102910

So answer is b) $102910

3) Cash disbursement

Budgeted Unit sales	1800
variable expense rate	4.9
Budgeted variable expense	8820
Fixed Expense	35680
Total Expense	44500
Less: Depreciation	-3300
Cash disbursement on expense	41200

So answer is c) $41200