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True or False? In the manufacturing overhead budget, the non-cash charges (such as depreciation) are deducted...

True or False?

In the manufacturing overhead budget, the non-cash charges (such as depreciation) are deducted from the total budgeted manufacturing overhead to determine the expected cash disbursements for manufacturing overhead.

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Answer #1

· The statement is TRUE.

· Cash payment [budgeted] for manufacturing overhead is required for preparation of the Cash Budget.
Hence, while preparing the manufacturing overhead budget [that contains all the cash and non cash overhead elements], the non cash elements of the budget [that are not to be paid in cash, like Depreciation] are deducted to determine the budgeted cash disbursements for manufacturing overhead.

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