Question

1. Haylock Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 7,400 direct labor-hours will be required in August. The variable overhead rate is $1.60 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $100,400 per month, which includes depreciation of $8,950. 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

$11,840

$103,290

$112,240

$91,450

2. Rients Corporation is a service company that measures its output by the number of customers served. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results of operations for October.

	Fixed Element per Month			Variable Element per Customer Served		Actual Total for October
Revenue				$	4,100	$	182,900
Employee salaries and wages	$	42,300		$	1,300	$	98,800
Travel expenses				$	700	$	30,500
Other expenses	$	31,500				$	31,900

When the company prepared its planning budget at the beginning of October, it assumed that 39 customers would have been served. However, 46 customers were actually served during October.

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Garry Corporation's most recent production budget indicates the following required production:

	October			November		December
Required production (units)	210,000			175,000		110,000

Each unit of finished product requires 3 pounds of raw materials. The company maintains raw materials inventory equal to 25% of the next month's expected production needs. How many pounds of raw material should Garry plan on purchasing for the month of November?

Answer 1

1.
Cash disbursement for overhead = 7400 x $1.60 + 100400-8950 = $103290

Answer is b. $103290

Garry Corporation

Direct Material Budget
	November	December
Production Required	175000	110000
Raw Material Per unit	3	3
Raw Material for Production	525000	330000
Add : Closing Stock Required	82500
Total Material Required	607500
Less : Opening Stock	131250
Material to be purchased	476250

Raw Material to be purchased = 476250 pounds

Requirement for Q2 is not specified