The manufacturing overhead budget at Franklyn Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 2,500 direct labor-hours will be required in January. The variable overhead rate is $5 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $43,010 per month, which includes depreciation of $3,750. All other fixed manufacturing overhead costs represent current cash flows. The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

A) $55,510
B) $12,500
C) $51,760
D) $39,260

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Steven Pondel · Accepted Answer

Final Answer : C, Explanation :  Variable overhead cost = Variable overhead rate × Direct labor-hours= $5 × 2,500 = $12,500Fixed overhead cost = Budgeted fixed manufacturing overhead - Depreciation= $43,010 - $3,750 = $39,260Total manufacturing overhead cost = Variable overhead cost + Fixed overhead cost= $12,500 + $39,260 = $51,760Therefore, the January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be $51,760.

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