Haylock Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 7,500 direct labor-hours will be required in August. The variable overhead rate is $1.50 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $100,410 per month, which includes depreciation of $8,940. All other fixed manufacturing overhead costs represent current cash flows. The August cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

Overhead cash disbursement= $102,720

Explanation:

First, we need to allocate variable overhead using the following formula:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 1.5*7,500

Allocated MOH= $11,250

Now, we can calculate the cash disbursement for August. Depreciation is not a cash expense. We should deduct it from fixed costs.

Overhead cash disbursement= 11,250 + 100,410 - 8,940

Overhead cash disbursement= $102,720

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