Davis Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter of the year. The budgeted variable manufacturing overhead rate is $1.70 per direct labor-hour; the budgeted fixed manufacturing overhead is $116,000 per month, of which $30,000 is factory depreciation.

Davis Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter of the year. The budgeted variable manufacturing overhead rate is $1.70 per direct labor-hour; the budgeted fixed manufacturing overhead is $116,000 per month, of which $30,000 is factory depreciation.

If the budgeted direct labor time for November is 7,000 hours, then the total budgeted cash disbursements for manufacturing overhead for November must be:

Multiple Choice

• $86,000
• $41,900
• $97,900

  Correct
• $127,900

Explanation

	November
Budgeted direct labor-hours		7,000
Variable manufacturing overhead rate	$	1.70
Variable manufacturing overhead	$	11,900
Fixed manufacturing overhead		116,000
Total manufacturing overhead		127,900
Less depreciation		30,000
Cash disbursement for manufacturing overhead	$	97,900