Morrish Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 6,100 direct labor-hours will be required in January. The variable overhead rate is $3.00 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $103,090 per month, which includes depreciation of $18,910. All other fixed manufacturing overhead costs represent current cash flows. The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

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andromache andromache · Answer 1 · 2019-08-09T09:32:21+02:00

Answer:

The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be $102480

Explanation:

For computing the cash disbursements for manufacturing overhead, the calculation is shown below:

= Direct labor cost + Fixed manufacturing overhead

where,

direct labor cost = Direct labor hours × per labor rate

= 6,100 × $3.00

= $18,300

And, in budgeted fixed manufacturing overhead, the depreciation should be deducted as it is a non cash expense.

So,

= Budgeted fixed manufacturing overhead - depreciation

= $103,090 - $18,910

= $84,180

Now apply the above values to the formula.

So, cash disbursements is = $18,300 + $84,180 = $102480

Hence, The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be $102480