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	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.

Answer 1

Question 1

Yuvwell Corporation

Manufacturing Overhead Budget

Particulars	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Total
Variable Manufacturing Overhead	67,200	58,800	60,600	65,400	252,000
Fixed Manufacturing Overhead	80,000	80,000	80,000	80,000	320,000
Total Manufacturing Overheads	147,200	138,800	140,600	145,400	572,000
Less: Depreciation	(20,000)	(20,000)	(20,000)	(20,000)	(80,000)
Cash Disbursement for Manufacturing Overhead	127,200	118,800	120,600	125,400	492,000

Particulars	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Total
Budgeted Direct Labour Hours	11,200	9,800	10,100	10,900	42,000
* Variable Overhead Rate per Direct Labour Hour	6	6	6	6	6
Variable Manufacturing Overhead	67,200	58,800	60,600	65,400	252,000

Question 2

Particulars	Amount
Total Manufacturing Overheads	572,000
÷ Total Direct Labour Hours	42,000
Predetermined Overhead Rate per Direct Labour Hour	13.62