Question at position 8 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: $127,900$86,000$97,900$41,900

Question

Question at position 8  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: $127,900$86,000$97,900$41,900

BlackTom AI · Accepted Answer

To analyze the budgeted manufacturing overhead for November, start by separating variable and fixed components.
Option A ($127,900): This sum would be the combination of the full fixed overhead ($116,000) plus the variable overhead for November ($11,900). However, cash disbursements exclude noncash items like depreciation, so including the entire fixed overhead as cash disbursement is incorrect when part of the fixed amount ($30,000) is depreciation.
Option B ($86,000): This number represents the fixed cash portion of overhead, calculated as total fixed overhead ($116,000) minus noncash depreciation ($30,000). It ignores the variable overhead that would be incurred for November, so it underreports total cash disbursements.
Option C ($97,900): This figure combines both components correctly for cash disbursements: variable overhead for November ($1.70 per direct labor-hour × 7,000 hours = $11,900) plus the cash portion of fixed overhead ($116,000 − $30,000 depreciation = $86,000). The sum $11,900 + $86,000 equals $97,900.
Option D ($41,900): This amount is far too low and does not align with either the full variable overhead or the correct fixed cash portion. It could only reflect a partial calculation that omits one or more required components.
In summary, the essential idea is to treat variable overhead based on labor-hours and to include only the cash-bearing portion of fixed overhead (excluding depreciation). The combination in Option C accurately reflects both components of November’s manufacturing overhead cash disbursements.

View Explanation

Log in for full answers

Similar Questions

Which of the following is considered an element of manufacturing overhead?

Which of the following costs would not be considered part of the manufacturing overhead of a furniture manufacturer?

Which of the following is not included in factory overhead?

What is manufacturing overhead cost?

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler