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 9,200 8,800 9,100 9,500 The company uses direct labor-hours as its overhead allocation base. The variable portion of its predetermined manufacturing overhead rate is $3.50 per direct labor-hour and its total fixed manufacturing overhead is $60,000 per quarter. The only noncash item included in fixed manufacturing overhead is depreciation, which is $15,000 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.

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facundobuzzetti facundobuzzetti · Answer 1 · 2021-06-12T02:46:32+02:00

Answer:

Results are below.

Explanation:

Giving the following information:

1st Quarter 2nd Quarter 3rd Quarter 4th

Quarter Budgeted direct labor-hours 9,200 8,800 9,100 9,500

The variable portion of its predetermined manufacturing overhead rate is $3.50 per direct labor hour.

Total fixed manufacturing overhead= $60,000

First, we need to calculate the total variable and fixed overhead for the year:

Total variable overhead= (9,200 + 8,800 + 9,100 + 9,500)*3.5= $128,100

Total fixed overhead= 60,000*4= $240,000

Total budgeted overhead= $368,100

Now, the predetermined overhead rate:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= (240,000 / 36,600) + 3.5

Predetermined manufacturing overhead rate= $10.06 per direct labor hour