Question

Single Plantwide Factory Overhead Rate The total factory overhead for Bardot Marine Company is budgeted for the year at $1,863,000. Bardot Marine manufactures two types of boats: speedboats and bass boats. The speedboat and bass boat each require six direct labor hours for manufacture. Each product is budgeted for 9,000 units of production for the year. When required, round all per unit answers to the nearest cent. a. Determine the total number of budgeted direct labor hours for the year. direct labor hours b. Determine the single plantwide factory overhead rate. $ per dih C. Determine the factory overhead allocated per unit for each product using the single plantwide factory overhead rate. Speedboat per unit Bass boat $ per unit

Answer 1

SOLUTION

A. Since 9,000 units have been budgeted to be manufactured for both the products, total units to be produced would be 18,000 (9,000*2).

Each unit requires 6 Direct labor hours (DLH) to be manufactured. Hence total budgeted DLH = 18,000 units * 6DLH per unit = 108,000 DLH.

B. Total budgeted factory overhead = $1,863,000, Total Budgeted DLH = 108,000

Hence, factory overhead rate per DLH = $1,863,000 / 108,000 = $17.25 per DLH

C. Since Speedboats and bassboats each require 6 DLH, factory overhead for both the products is the same. It is calculated below:

Factory overhead per unit = DLH per unit * Factory overhead per DLH

= 6 DLH * $17.25 = $103.50

Speedboat- $103.50 per unit

Bass boat - $103.50 per unit