Question

In: Accounting

he direct labor budget of Yuvwell Corporation for the upcoming fiscal year contains the following details...

he 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 11,200 9,800 10,100 10,900

The company uses direct labor-hours as its overhead allocation base. The variable portion of its predetermined manufacturing overhead rate is $6.00 per direct labor-hour and its total fixed manufacturing overhead is $80,000 per quarter. The only noncash item included in fixed manufacturing overhead is depreciation, which is $20,000 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.

Solutions

Expert Solution

SOLUTION:-

Requirement (1):-

The company uses direct labor-hours as its overhead allocation base.

Yuvwell corporation
Manufacturing overhead budget
1st quarter 2nd quarter 3rd quarter 4th quarter Year
Budgeted direct labor hours (a) 11,200 9,800 10,100 10,900 42,000
Variable manufacturing overhead rate (b) $6.00 $6.00 $6.00 $6.00 $6.00
Variable manufacturing overhead (c) =(a×b) 67,200 58,800 60,600 65,400 252,000
Fixed manufacturing overhead (d) 80,000 80,000 80,000 80,000 320,000
Total manufacturing overhead (c+d) 147,200 138,800 140,600 145,400 572,000
Less :- depreciation 20,000 20,000 20,000 20,000 80,000
Cash disbursements for manufacturing overhead 127,200 118,800 120,600 125,400 492,000

Requirement (2):-

Total budgeted manufacturing overhead for the year (a) 572,000
Budgeted direct labor-hours for the year (b) 42,000
Predetermined overhead rate for the year (a)/(b) 14.3

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