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 8,200 8,300 8,600 8,000 The company uses direct labor-hours as its overhead allocation base. The variable portion of its predetermined manufacturing overhead rate is $2.25 per direct labor-hour and its total fixed manufacturing overhead is $50,000 per quarter. The only noncash item included in fixed manufacturing overhead is depreciation, which is $12,500 per quarter. Required: Prepare the company’s manufacturing overhead budget for the upcoming fiscal year. Compute the company’s predetermined overhead rate (including both variable and fixed manufacturing overhead) for the upcoming fiscal year.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Exercise 8-5 (Algo) Manufacturing Overhead Budget [LO8-6]
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 | 8,200 | 8,300 | 8,600 | 8,000 |
The company uses direct labor-hours as its overhead allocation base. The variable portion of its predetermined manufacturing overhead rate is $2.25 per direct labor-hour and its total fixed manufacturing overhead is $50,000 per quarter. The only noncash item included in fixed manufacturing overhead is depreciation, which is $12,500 per quarter.
Required:
- Prepare the company’s manufacturing overhead budget for the upcoming fiscal year.
- Compute the company’s predetermined overhead rate (including both variable and fixed manufacturing overhead) for the upcoming fiscal year.
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