Avril Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The variable overhead rate is $4.60 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $54,080 per month, which includes depreciation of $3,840. All other fixed manufacturing overhead costs represent current cash flows. The direct labor budget indicates that 3,200 direct labor-hours will be required in October. The October cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:
A. $50,240
B. $64,960
C. $14,720
D. $68,800

Question

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Respuesta :

andromache andromache · Answer 1 · 2019-12-08T04:33:35+01:00

Answer:

B. $64,960

Explanation:

The computation of the cash disbursements for manufacturing overhead on the manufacturing overhead budget is shown below:

= Direct labor hours × variable overhead rate per direct labor-hour + budgeted fixed manufacturing overhead - depreciation expense

= 3,200 direct labor hours × $4.60 + $54,080 - $3,840

= $14,720 + $50,240

= $64,960

Direct labor hours × variable overhead rate per direct labor-hour is also known as variable manufacturing overhead