Question

Multiple Production Department Factory Overhead Rates

The total factory overhead for Bardot Marine Company is budgeted for the year at $576,000, divided into two departments: Fabrication, $423,000, and Assembly, $153,000. Bardot Marine manufactures two types of boats: speedboats and bass boats. The speedboats require one direct labor hour in Fabrication and two direct labor hours in Assembly. The bass boats require two direct labor hours in Fabrication and one direct labor hour in Assembly. Each product is budgeted for 6,000 units of production for the year.

If required, round all per unit answers to the nearest cent.

a. Determine the total number of budgeted direct labor hours for the year in each department.

Fabrication	direct labor hours
Assembly	direct labor hours

b. Determine the departmental factory overhead rates for both departments.

Fabrication	$ per dlh
Assembly	$ per dlh

c. Determine the factory overhead allocated per unit for each product using the department factory overhead allocation rates.

Speedboat:	$ per unit
Bass boat:	$ per unit

Answer 1

Solution :

(a) Total Number of Budgeted Labor Hours :

Fabrication

Particulars	Working	Labor Hours
Speedboats	6,000 Units * 1 Labor Hour	6,000 Labor Hours
Bassboats	6,000 * 2 Labor Hours	12,000 Labor Hours
Budgeted Labor Hours		18,000 Labor Hours

Assembly

Particulars	Working	Labor Hours
Speedboats	6,000 Units * 2 Labor Hour	12,000 Labor Hours
Bassboats	6,000 * 1 Labor Hours	6,000 Labor Hours
Budgeted Labor Hours		18,000 Labor Hours

(b)

Department	Total OH	Total Direct Labor Hours	OH rate per Hour
Fabrication	$ 423,000	18,000	$ 23.50 per dlh
Assembly	$ 153,000	18,000	$ 8.5 per dlh

(c) Overhead Allocation per Unit

Boats	Working	Amount
Speedboat : Fabrication Assembly	1 Labor Hour * $ 23.50 = $ 23.50 2 Labor Hour * $ 8.50 = $ 17.00	$ 40.50 per Unit
Bassboat Fabrication Assembly	2 Labor Hour * $ 23.50 = $ 47.00 1 Labor Hour * $ 8.50 = $ 8.50	$ 55.50 per Unit

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