Single plantwide factory overhead rate
Bach Instruments Inc. makes three musical instruments: flutes, clarinets, and oboes. The budgeted factory overhead cost is $127,840. Overhead is allocated to the three products on the basis of direct labor hours. The products have the following budgeted production volume and direct labor hours per unit:
Budgeted Production Volume | Direct Labor Hours Per Unit | ||||
Flutes | 2,200 | units | 0.5 | ||
Clarinets | 700 | 1.4 | |||
Oboes | 1,400 | 1.2 |
If required, round all per unit answers to the nearest cent.
a. Determine the single plantwide overhead
rate.
$ per direct labor hour
b. Use the overhead rate in (a) to determine the amount of total and per-unit overhead allocated to each of the three products.
Total Factory Overhead Cost |
Per Unit Factory Overhead Cost |
|
Flutes | $ | $ |
Clarinets | ||
Oboes | ||
Total | $ |
Requirement 1
single Plantwide overhead rate = $34 per direct labor hour
Working
Flutes | Clarinets | Oboes | Total | |
Budgeted Production Volume | 2200 | 700 | 1400 | |
Direct Labor Hours Per Unit | 0.5 | 1.4 | 1.2 | |
Total Hours needed | 1100 | 980 | 1680 | 3760 |
Overhead /Total Labor hour = Overhead rate
127840/3760= $34 per Hour
Requirement 2
Total Factory Overhead cost |
Per Unit Factory Overhead Cost |
|
Flutes | $ 37,400 | $ 17.00 |
Clarinets | $ 33,320 | $ 47.60 |
Oboes | $ 57,120 | $ 40.80 |
Total | $ 127,840 |
Working
Cost assigned to Flutes | |||
Activity name | Activity Rates | Activity | ABC Cost |
(A) | (B) | (A x B) | |
Overhead | $ 34.00 | 1,100.00 | $ 37,400.00 |
.
Cost assigned to Clarinets | |||
Activity name | Activity Rates | Activity | ABC Cost |
(A) | (B) | (A x B) | |
Overhead | $ 34.00 | 980 | $ 33,320.00 |
.
Cost assigned to Oboes | |||
Activity rate(A) | Activity Driver Incurred (B) | Overhead Assigned (C=A*B) | |
Overhead | $ 34.00 | 1680 | $ 57,120.00 |
Per unit cost = Overhead applied / units produced
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