Question

Single Plantwide Factory Overhead Rate

Mozart Music Inc. makes three musical instruments: trumpets, tubas, and trombones. The budgeted factory overhead cost is $117,980. 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	2,700	units	0.5
Tubas	500		1.6
Trombones	1,200		1.1

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

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

Solution

Plant wide factory Overhead rate per Labor Hour

$               34.00

.

	Total Factory Overheads	Per Unit Factory Overheads
Trumpets	$          45,900.00	$               17.00
Tubas	$          27,200.00	$               54.40
Trombones	$          44,880.00	$               37.40
Total	$        117,980.00

Working

	Budgeted Production Volume (A)	Direct labor Hour per Unit (B)	Total labor Hours for each Product (A x B)
Trumpets	2700	0.5	1350.00
Tubas	500	1.6	800.00
Trombones	1200	1.1	1320.00
Total Labor Hours			3470.00

.

calculation of Predetermined Overhead rate
(A)	Total Overheads	$     117,980.00
(B)	Total Direct labor Hours	3470.00
(A/B)	Plant wide factory Overhead rate per Labor Hour	$               34.00

.

	Labor Hours (A)	Plant wide factory Overhead rate per Labor Hour (B)	Total Factory Overheads (C= (A xB))	Budgeted production in units (D)	Per unit factory Overheads (C/D)
Trumpets	1350.00	$               34.00	$ 45,900.00	2700	$    17.00
Tubas	800.00	$               34.00	$ 27,200.00	500	$    54.40
Trombones	1320.00	$               34.00	$ 44,880.00	1200	$    37.40
Total	3470.00		117980.00