From the following details provided by chestnut inc. prepare the manufacturing o
ID: 2580598 • Letter: F
Question
From the following details provided by chestnut inc. prepare the manufacturing overhead budget for the year. Also calculate the predrect Labor Hours ned overhead allocation rate, using direct labor hours as the allocation base. Budgeted production units 1st quarter)15000, 2nd)18000 3rd)21000 4th)24000 ; variable overhead cost per unit 1st quarter)$45 2nd)$45 3rd)$45 4th)$45; Depreciation 1st quarter) 3000 2nd)$3000 3rd)$3000 4th)$3000 ; Rent 1st quarter)$5000 2nd)5750 3rd)6250 4th)7250; Direct labor Hours 1st) 12500 2nd)14500 3rd)17200 4th)12800
Explanation / Answer
Computation of manufacturing overhead budget for the year:
1st quarter
2nd quarter
3rd quarter
4th quarter
Total
Budgeted production units, a
15,000
18,000
21,000
24,000
78,000
Variable overhead cost per unit, b
45
45
45
45
45
Total variable overhead costs, c = a*b
675,000
810,000
945,000
1,080,000
3,510,000
Fixed costs
Depreciation, d
3,000
3,000
3,000
3,000
12,000
Rent, e
5,000
5,750
6,250
7,250
24,250
Total fixed cost, f = d+e
8,000
8,750
9,250
10,250
36,250
Total Manufacturing overhead cost, g = c+f
683,000
818,750
954,250
1,090,250
3,546,250
Predetermined overhead rate = Total manufacturing overhead costs / total direct labor hours
= $3,546,250 / 57,000
= $62.21
1st quarter
2nd quarter
3rd quarter
4th quarter
Total
Budgeted production units, a
15,000
18,000
21,000
24,000
78,000
Variable overhead cost per unit, b
45
45
45
45
45
Total variable overhead costs, c = a*b
675,000
810,000
945,000
1,080,000
3,510,000
Fixed costs
Depreciation, d
3,000
3,000
3,000
3,000
12,000
Rent, e
5,000
5,750
6,250
7,250
24,250
Total fixed cost, f = d+e
8,000
8,750
9,250
10,250
36,250
Total Manufacturing overhead cost, g = c+f
683,000
818,750
954,250
1,090,250
3,546,250
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