Question

Yancey Company expects to produce 2,070 units in January that will require 12,420 hours of direct labor and 2,270 units in February that will require 13,620 hours of direct labor. Yancey budgets $5 per unit for variable manufacturing overhead, $2,100 per month for depreciation,and $117,250 per month for other fixed manufacturing overhead costs. Prepare Yancey's manufacturing overhead budget fofr January and February, including the predetfermined overhead allocation rate using direct labor hours as the allocation base.

Answer 1

Manufacturing Overhead Budget
	January	February	Total
Budgeted units to be produced	2,070	2,270	4,340
Variable overhead cost per unit	5	5	5
Budgeted variable overhead	$          10,350	$          11,350	$          21,700
Budgeted fixed overhead:
Depreciation	2,100	2,100	4,200
Other Manufacturing Overhead	117,250	117,250	234,500
Total Budgeted Fixed Overhead	119,350	119,350	238,700
Budgeted manufacturing overhead costs	$        129,700	$        130,700	$        260,400
Direct Labour Hours	12,420	13,620	26,040
Predetermined overhead allocation rate(260400/26040)			$                  10

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