Morrish Inc

question 22

Multiple Choice

Morrish Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 7,100 direct labor-hours will be required in January. The variable overhead rate is $1.80 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $102,950 per month, which includes depreciation of $19,880. All other fixed manufacturing overhead costs represent current cash flows. The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

• A)$115,730
• B)$95,850
• C)$12,780
• D)$83,070

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Definitions:

Base Rate Component

Fundamental part of an interest rate, often the reference rate from which banks determine their own lending rates.

Inflation

The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.

Production Sector

A segment of the economy that includes the activities involving the manufacturing and production of goods.

Consumption Sector

Part of the economy that involves the purchase of goods and services by individuals and households.