Question

Mozart Music Inc. makes three musical instruments: trumpets, tubas, and trombones. The budgeted factory overhead cost is $3,469,400. Factory 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
Trumpets	4,000	units	1.2
Tubas	1,200		0.9
Trombones	2,500		1.3

a. Determine the single plantwide factory overhead rate.
$ per direct labor hour

b. Use the factory overhead rate in (a) to determine the amount of total and per-unit factory overhead allocated to each of the three products.

	Total Factory Overhead Cost	Per Unit Factory Overhead Cost
Trumpets	$	$
Tubas
Trombones
Total	$

Answer 1

• All working forms part of the answer
• Working 1

	Units	DLH per unit	Total DLHs
	[A]	[B]	[C = A x B]
Trumpets	4,000	1.2	4,800
Tubas	1,200	0.9	1,080
Trombones	2,500	1.3	3,250
Total Direct Labor Hours [DLHs]			9,130

• Requirement ‘a’, with working

A	Budgeted Factory Overhead	$      3,469,400.00
B [calculated in Working 1]	Total Direct Labor Hours [DLHs]	9,130
C = A/B	Overhead rate per DLH	$                  380.00

• Requirement ‘b’ with working columns

	No. of DLHs	Total factory Overhead Cost	Units	Per unit Factory Overhead cost
	[A]	[B = A x $ 380]	[C]	[D = B/C]
		[Answer column]		[Answer Column]
Trumpets	4,800	$     1,824,000.00	4,000	$                456.00
Tubas	1,080	$        410,400.00	1,200	$                342.00
Trombones	3,250	$     1,235,000.00	2,500	$                494.00
TOTAL		$     3,469,400.00