From the Following Details Provided by Chestnut,Inc

question 48

Essay

From the following details provided by Chestnut,Inc.,prepare the manufacturing overhead budget for the year.Also,calculate the predetermined overhead allocation rate,using direct labor hours as the allocation base.
$$\begin{array} { | l | r | r | r | r | } \hline & \begin{array} { c } \text { First } \\\text { Quarter }\end{array} & \begin{array} { c } \text { Second } \\\text { Quarter }\end{array} & \begin{array} { c } \text { Third } \\\text { Quarter }\end{array} & \begin{array} { c } \text { Fourth } \\\text { Quarter }\end{array} \\\hline \text { Budgeted production units } & 15,000 & 18,000 & 21,000 & 24,000 \\\hline \text { Variable overhead cost per unit } & \$ 45 & \$ 45 & \$ 45 & \$ 45 \\\hline \text { Fixed overhead costs: } & & & & \\\hline \text { Depreciation } & \$ 3,000 & \$ 3,000 & \$ 3,000 & \$ 3,000 \\\hline \text { Rent } & \$ 5,000 & \$ 5,750 & \$ 6,250 & \$ 7,250 \\\hline \text { Direct Labor Hours } & 12,500 & 14,500 & 17,200 & 12,800 \\\hline\end{array}$$

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Definitions:

Flexible Budget

A budget that varies or adapts based on fluctuations in activity or volume levels.

Indirect Materials Cost

The cost of materials used in the production process that cannot be directly traced to the product, such as lubricants and cleaning supplies.

Machine-Hours

A measure of production output or used capacity based on the number of hours machines are operated.

Spending Variance

The difference between the actual amount spent and the budgeted amount for a particular period, used in budget control and analysis.