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 |
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