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 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.

 1) Manufacturing Overhead Budget: 1st Quarter (i) 2nd Quarter (ii) 3rd Quarter (iii) 4th Quarter (iv) Year (i+ii+iii+iv) Budgeted direct labor-hours (a) 8,800 8,600 8,900 8,300 34,600 Variable manufacturing overhead rate per hour (b) \$3 \$3 \$3 \$3 \$3 Total Variable manufacturing overheads (a*b) \$26,400 \$25,800 \$26,700 \$24,900 \$103,800 Fixed manufacturing overheads \$56,000 \$56,000 \$56,000 \$56,000 \$224,000 Total Budgeted Manufacturing Overheads \$82,400 \$81,800 \$82,700 \$80,900 \$327,800 2) Predetermined overhead rate for the year: Total Budgeted Manufacturing Overheads for year (a) \$327,800 Total budgeted direct-labor hours for the year (b) 34,600 Predetermined overhead rate for the year (a/b) \$9.47