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| Edgington Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The variable overhead rate is $1.80 per direct labor-hour. The company’s budgeted fixed manufacturing overhead is $96,570 per month, which includes depreciation of $19,860. All other fixed manufacturing overhead costs represent current cash flows. The November direct labor budget indicates that 8,700 direct labor-hours will be required in that month. |
| Required: |
| a. | Determine the cash disbursement for manufacturing overhead for November. |
Cash disbursement for manufacturing overhead=
| b. | Determine the predetermined overhead rate for November. (Round your answer to 2 decimal places.) |
Predetermined overhead rate=
Expert Answer
a ) Cash disbursement for manufacturing overhead= Fixed manufacturing overhead costs ( 96570 – 19860 ) + variable overhead 1.80 * 8700 direct labor-hours = 76710 + 15660 = $ 92370
b) predetermined overhead rate for November = ( 96570 / 8700 ) + 1.80
$ 11.1 + 1.80 = $ 12.90 per DLH
