Question

1. Edgington Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The variable overhead rate is $1.40 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $92,130 per month, which includes depreciation of $19,820. All other fixed manufacturing overhead costs represent current cash flows. The November direct labor budget indicates that 8,300 direct labor-hours will be required in that month.

Required:

a. Determine the cash disbursement for manufacturing overhead for November.

b. Determine the predetermined overhead rate for November. (Round your answer to 2 decimal places.)

2. Arakaki Inc. is working on its cash budget for January. The budgeted beginning cash balance is $15,000. Budgeted cash receipts total $184,000 and budgeted cash disbursements total $183,000. The desired ending cash balance is $31,000. The excess (deficiency) of cash available over disbursements for January will be: $199,000 $14,000 $16,000 $1,000

3. Sparks Corporation has a cash balance of $8,100 on April 1. The company must maintain a minimum cash balance of $6,500. During April, expected cash receipts are $49,000. Cash disbursements during the month are expected to total $53,500. Ignoring interest payments, during April the company will need to borrow: $2,900 $6,500 $3,600 $4,500

Answer 1

Solution 1-a:

Cash Disbursement for manufacturing overhead for November = variable overhead + Cash flows for fixed overhead

= ($1.40*8300) + ($92130 - $19820) = $11620 + $72310 = $83,930

Solution 1-b:

Predetermined overhead rate = Total Overhead / Total direct labor Hours = ($11620 + $92130) / 8300 = $12.50

Solution 2:

Excess (deficiency) of cash available over disbursements for January = Beginning cash Balance + Cash Receipts - Cash Disbursement

= $15000 +  $184,000 - $183000 = $16,000

Solution 3:

Excess (deficiency) of cash available over disbursements for April = $8100 + $49000 - $53500 = $3600

Company will need to borrow = Minimum cash balance - Excess (deficiency) of cash available over disbursements for April

= $6500 - $3600 = $2,900