Question

Single plantwide factory overhead rate

Bach Instruments Inc. makes three musical instruments: flutes, clarinets, and oboes. The budgeted factory overhead cost is $135,660. 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	2,100	units	0.5
Clarinets	800		1.4
Oboes	1,400		1.0

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	$

Answer 1

a)

	Budgeted Production Volume (i)	Direct Labor Hours Per Unit (ii)	Total direct labor hours (i) x (ii)
Flutes	2,100	0.5	1,050
Clarinets	800	1.4	1,120
Oboes	1,400	1.0	1,400
Total			3,570

Budgeted factory overhead cost = $135,660

Total direct labor hours = 3,570

Single plantwide overhead rate = Budgeted factory overhead cost/Total direct labor hours
= 135,660/3,570

= $38 per direct labor hour

b)

	Total direct labor hours (i)	Single plantwide overhead rate (ii)	Total Factory Overhead Cost (iii) = (i) x (ii)	Budgeted Production Volume (iv)	Per Unit Factory Overhead Cost (iii)/(iv)
Flutes	1,050	$38 per direct labor hour	$39,900	2,100	$19
Clarinets	1,120	$38 per direct labor hour	$42,560	800	$53.2
Oboes	1,400	$38 per direct labor hour	$53,200	1,400	$38
Total			$135,660

Kindly give a positive rating if you are satisfied with the answer. Feel free to ask if you have any doubt. Thanks.