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Davol Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter of the year. The budgeted variable manufacturing overhead rate is $7.30 per direct labor-hour; the budgeted fixed manufacturing overhead is $94,000 per month, of which $18,000 is factory depreciation.

34

If the budgeted direct labor time for October is 6,000 hours, then the total budgeted manufacturing overhead for October is: $137, 800 $76,000 $61,800 $112,000 Balm forth Products, Inc. makes and sells a single product called a Bik. It takes three yards of Material A to make one Bik. Budgeted production of Biks for the next five months is as follows: The company wants to maintain monthly ending inventories of Material A equal to 20% of the following month's production needs. On January 31, this target had not been attained since only 2,000 yards of Material A were on hand. The cost of Material A is $0.70 per yard. The company wants to prepare a Direct Materials Purchases Budget. The total cost of Material A to be purchased in February is: $37,534 $31,920 $21,286 $38,934