Question

Morganton Company makes one product and it provided the following information to help prepare the master budget:

1. The budgeted selling price per unit is $65. Budgeted unit sales for June, July, August, and September are 8,200, 12,000, 14,000, and 15,000 units, respectively. All sales are on credit.
2. Forty percent of credit sales are collected in the month of the sale and 60% in the following month.
3. The ending finished goods inventory equals 20% of the following month’s unit sales.
4. The ending raw materials inventory equals 10% of the following month’s raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.00 per pound.
5. Twenty percent of raw materials purchases are paid for in the month of purchase and 80% in the following month.
6. The direct labor wage rate is $13 per hour. Each unit of finished goods requires two direct labor-hours.
7. The variable selling and administrative expense per unit sold is $1.30. The fixed selling and administrative expense per month is $62,000.
8. There is no fixed manufacturing overhead and the variable manufacturing overhead is $8 per direct labor hours.

Construct the schedule for manufacturing overhead:

Morganton Company
Manufacturing Overhead Budget
For the Period Ended September 30, 2018
			June	July	August	September	Total
Budgeted Direct Labor- Hours
Variable Manufacturing Overhead Rate
Variable Manufacturing Overhead
Fixed Manufacturing Overhead
Total Manufacturing Overhead
Less Depreciation
Cash Disbursements for Manufacturing OH

Answer 1

	June	July	August	September	Total
Unit Sales	8200	12000	14000	15000
Direct labor hours per unit	2	2	2	2
Budgeted Direct Labor- Hours	16400	24000	28000	30000
Variable Manufacturing Overhead Rate	$                      8	$                         8	$                          8	$                      8
Variable Manufacturing Overhead	$         131,200	$            192,000	$             224,000	$         240,000	$        787,200
Fixed Manufacturing Overhead	$                    -	$                        -	$                        -	$                    -
Total Manufacturing Overhead	$         131,200	$            192,000	$             224,000	$         240,000	$        787,200
Less Depreciation	$                    -	$                        -	$                        -	$                    -
Cash Disbursements for Manufacturing OH	$         131,200	$            192,000	$             224,000	$         240,000	$        787,200