Question

The 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 9,800 9,100 9,400 10,200 The company uses direct labor-hours as its overhead allocation base. The variable portion of its predetermined manufacturing overhead rate is $4.25 per direct labor-hour and its total fixed manufacturing overhead is $66,000 per quarter. The only noncash item included in fixed manufacturing overhead is depreciation, which is $16,500 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.  

Answer 1

1).	Yuvwell Corporation
	Manufacturing Overhead Budget
	For Upcoming year
		Quarter 1	Quarter 2	Quarter 3	Quarter 4	Year
	Budgeted direct labour hour	9800.00	9100.00	9400.00	10200.00	38500.00
	Variable Overhead @$4.25	$ 41,650.00	$ 38,675.00	$ 39,950.00	$ 43,350.00	$ 163,625.00
	Fixed Overhead
	Deprecation	$ 16,500.00	$ 16,500.00	$ 16,500.00	$ 16,500.00	$ 66,000.00
	Other Fixed manufacturing Overhead	$ 49,500.00	$ 49,500.00	$ 49,500.00	$ 49,500.00	$ 198,000.00
		$ 107,650.00	$ 104,675.00	$ 105,950.00	$ 109,350.00	$ 427,625.00
2).	Predetermined overhead rate = Estimated manufacturing overhead cost/Estimated total units in the allocation base
	= $427625/38500
	= $11.11

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