Edgington Inc bases its manufacturing overhead budget on bud

Edgington Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The variable overhead rate is $1.30 per direct labor-hour. The company\'s budgeted fixed manufacturing overhead is $91,020 per month, which includes depreciation of $19,810. All other fixed manufacturing overhead costs represent current cash flows. The November direct labor budget indicates that 8,200 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

Solution

Req a: Cash disbursement required for Nov month: Fixed manufacturing OH 91020 Less: Depreciation 19810 Cash required for fixed Manufacturing OH 71210 Cash required for Variable Mnaufacturing OH 10660 (8200 DLH @ 1.30) Cash disbursement for Manufacturing OH 81870 Req b: Pre-determined OH rate: Variable OH rate per DLH 1.3 Fixed OH rate per DLH: Estimated Fixed OH 91020 Divide: Estimated DLH 8200 11.1 Pre-determined OH rate: 12.4