Question

The Production Department of Dell Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year: Units to be produced........... 1* Quarter 2nd Quarter 3rd Quarter4h Quarter 12.000 10.000 13.000 14.000 Each unit requires 3 pounds of direct materials and the purchase price is $4 per pound. The unit also requires 0.2 direct labor-hours and direct labor are paid $12.00 per hour. In addition, the variable manufacturing overhead rate is $1.75 per direct labor-hour. The fixed manufacturing overhead is $86,000 per quarter including the depreciation. The only noncash element of manufacturing overhead is depreciation, which is $23.000 per quarter. Required: 1. Prepare the manufacturing overhead budget for all quarters and total. 2. Compute the manufacturing overhead rate per hour. Answer: 1. The company's manufacturing overhead budget for all quarters and total. 1 0 . 2 Q. 3rd Q. 460, Total 2. The manufacturing overhead rate per hour.

Answer 1

1 Manufacturing overhead budget Sno Particulars 1 Number of units Produced 2 Labour hour required for one Unit 3 Number of labour hours required(1*2) 4 Variable Manufacturing overhead per direct labour hour 5 Variable Manufacturing overhead(384) 6 Fixed Manufacturing overhead(384) 7 Depreciation 8 Total Manufacturing overhead Excluding depreciation (5+6-7) Quarter1 Quarter2 Quarter3 Quarter4 Total 12000 10000 13000 14000 0.2 0.2 0.2 0.2 2400 2000 2600 2800 9800 1.75 1.75 1.75 1.75 4200 3500 4550 4900 86000 86000 86000 86000 23000 23000 23000 23000 67200 66500 67550 67900 269150 2 Manufacturing overhead budget rate per hour = Total Manufacturing overhead Excluding depreciation Total labour hours 269150 9800 27.46