Chapter 22, Problem 7SE

Preparing an operating budget—manufacturing overhead budget

Bennett Company expects to produce 2,030 units in January that will require 8,120 hours of direct labor and 2,210 units in February that will require 8,840 hours of direct labor. Bennett budgets $10 per unit for variable manufacturing overhead; $2,100 per month for depreciation; and $78,460 per month for other fixed manufacturing overhead costs. Prepare Bennett’s manufacturing overhead budget for January and February, including the predetermined overhead allocation rate using direct labor hours as the allocation base.