Question

Morrish Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 7,100 direct labor-hours will be required in January. The variable overhead rate is $1.80 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $102,950 per month, which includes depreciation of $19,880. All other fixed manufacturing overhead costs represent current cash flows. The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

Answer 1

Answer:

$95,850

Explanation:

To calculate cash disbursements for manufacturing overhead:

Direct labor cost + Fixed manufacturing overhead

where,

direct labor cost = Direct labor hours × per labor rate

= $7,100 x $1.8 =

$12,780

Budgeted fixed manufacturing overhead - depreciation

102,950 - 19880 =

Direct labor cost + Fixed manufacturing overhead =

$83,070 + $12,780

= $95,850

The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be $95,850

Answer 2

Answer:

The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be $95,850

Explanation:

In order to calculate the the January cash disbursements for manufacturing overhead on the manufacturing overhead budget we would have to use the following formula:

Total cash disbursement for overhead in January =Variable overhead+Cash portion of fixed manufacturing overhead

Variable overhead = 7,100 direct labor-hours × $1.80 = $12,780

Cash portion of fixed manufacturing overhead = $102,950 - $19,880 = $83,070

Therefore, Total cash disbursement for overhead in January = $12,780 + $83,070

Total cash disbursement for overhead in January =$95,850

The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be $95,850