Answer to Question #43042 in Management for salina

Question

Southern Mills is a textile manufacturing company in northern Queensland. Every
year the company prepares a complete set of budgets. The budgeting process begins
with information supplied by the Sales and Marketing department.
Variable manufacturing costs, for which direct labour hours is the cost driver, are
expected to be $2,120,800 for the quarter. Fixed manufacturing overhead is expected
to be $2,400,000 for the quarter. The fixed expenses include monthly depreciation
expense of $100,000.
Budgeted direct labour hours are as follows:
January 14,320 hours
February 21,200 hours
March 17,500 hours
Required:
(a) Prepare an overhead budget for each month in the first quarter and for the total quarter.
(b) Prepare a schedule of cash payments for manufacturing overhead.