Question

Single plantwide factory overhead rate Bach Instruments Inc. makes three musical instruments: Mutes, clarinets, and oboes. The budgeted factory overhead cost is $106,800 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 Direct Labor Hours Per Volume Unit Flutes 2,100 units 0.6 Clarinets 800 1.5 Oboes 1,000 1.1 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 Per Unit Factory Overhead Cost Factory Overhead Cost Flutes Clarinets Oboes Total

Answer 1

Total budgeted factory overhead cost = $ 106800

as overhead is allocated to the three products on the basis of direct labor hours therefore first we need to calculate the total direct labor hour used to manufactured all units of thee products.

a b C=a*b Budgeted Total prodction Direct labor direct volume (in hours per labour units) unit used 2100 0.6 1260 800 1.5 1200 1000) 1.1 1100 3900 3560 Flutes Clarinets oboes Total

(a) Determination of the single plantswide overhead rate:

Plantwise overhead rate = Total overhead/Total Direct labor hours

= 106800/3560

= $ 30 per direct labor hour

(b) use the ovehead rate (a) to determine the amount of total and per unit overhead to each of the three products -

per unit factory Total factory overhead overhead cost cost $ 37,800 $ 18 $ 36,000 $ 45 $ 33,000 $ 33 $ 106,800 Flutes ($ 30*1260) Clarinets ($30*1200) oboes ($30*1100) Total

Total factory overhead cost = plantwide overhead rate*Total direct labor hour used per Musical instrument(SKU).

per unit factory overhead = Total factory overhead cost per musical instrument/budgeted production volume of that musical instrument

Please check with your answer and let me know.