Question

he total factory overhead for Big Light Company is budgeted for the year at $494,040. Big Light manufactures two different products: night lights and desk lamps. Night lights are budgeted for 12,300 units. Each night light requires 2 hours of direct labor. Desk lamps are budgeted for 9,700 units. Each desk lamp requires 3 hours of direct labor.

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

b Determine the single plantwide factory overhead rate using direct labor hours as the allocation base. Round your answer to two decimal places.
$ per direct labor hour

c Determine the factory overhead allocated per unit for each product using the single plantwide factory overhead rate determined in (b). Round your answers to two decimal places.

Night Lights	$___ per unit
Desk Lamps	$ ___per unit

Answer 1

Part a: Total Number of budgeted direct labor hours for the year

Night Lights

Budgeted units = 12,300 units

Direct labor hours required for producing one unit= 2 hours

Direct labor hours required for producing 12,300 units = 12,300 units * 2 hours = 24,600 hours

Desk Lamps

Budgeted units = 9,700 units

Direct labor hours required for producing one unit= 3 hours

Direct labor hours required for producing 9,700 units = 9,700 units * 3 hours = 29,100 hours

Total number of budgeted direct labor hours = 24,600 + 29,100 = 53,700 hours

Part b: Single Plant wide factory overhead rate

Single Plant wide factory overhead rate = Overhead cost / Direct labor hours

Overhead cost = $494,040

Direct labor hours = 53,700

Single Plant wide factory overhead rate per hour = $494,040 / 53,700 hours = $9.20 per direct labor hour

Part c: Factory overhead allocated per unit for each product

Night Lights

Single Plant wide factory overhead rate per hour = $9.20 per hour

Direct labor hours = 24,600

Overhead cost = 24,600 hours * $9.20 = $226,320

Budgeted Units = 12,300 units

Overhead cost per unit = $226,320 / 12,300 units = $18.40 per unit

Desk Lamps

Single Plant wide factory overhead rate per hour = $9.20 per hour

Direct labor hours = 29,100

Overhead cost = 29,100 hours * $9.20 = $267,720

Budgeted Units = 9,700 units

Overhead cost per unit = $267,720 / 9,700 units = $27.60 per unit

All the best...