Question

Single plantwide factory overhead rate

Bach Instruments Inc. makes three musical instruments: flutes, clarinets, and oboes. The budgeted factory overhead cost is $103,020. 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	2,000	units	0.4
Clarinets	500		1.6
Oboes	1,300		1.1

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

Answer -

a. Answer -

The single plant-wide overhead rate = $34 per direct labor hour

Calculation:

Flutes:

Hours required for production of Flutes = Budgeted production volume * Direct labor hours per unit

= 2000 units * 0.4 direct labor hours per unit

= 800 direct labor hours

Clarinets:

Hours required for production of Clarinets = Budgeted production volume * Direct labor hours per unit

= 500 units * 1.6 direct labor hours per unit

= 800 direct labor hours

Oboes:

Hours required for production of Oboes = Budgeted production volume * Direct labor hours per unit

= 1300 units * 1.1 direct labor hours per unit

= 1430 direct labor hours

Total hours required for production of all three product:

= Hours required for production of Flutes + Hours required for production of Clarinets + Hours required for production of Oboes

= 800 direct labor hours + 800 direct labor hours + 1430 direct labor hours

= 3030 direct labor hours

As per given information,

The budgeted factory overhead cost = $103020

Overhead is allocated to the three products on the basis of direct labor hours.

So,

Total budgeted plant-wide allocation base = Total hours required for production of all three product

Therefore,

Total budgeted plant-wide allocation base = 3030 direct labor hours

Now,

The single plant-wide overhead rate = The budgeted factory overhead cost / Total budgeted plant-wide allocation base

= $103020 / 3030 direct labor hours

= $34 per direct labor hour

b. Answer -

	Total factory overhead cost	Per unit factory overhead cost
Flutes	$27200	$13.60
Clarinets	$27200	$54.40
Oboes	$48620	$37.40
Total	$103020

Calculation:

Flutes:

Total factory overhead cost = Hours required for production of Flutes * The single plant-wide overhead rate

= 800 direct labor hours * $34 per direct labor hour

= $27200

Per unit factory overhead cost = Direct labor hours per unit * The single plant-wide overhead rate

= 0.4 direct labor hours per unit * $34 per direct labor hour

= $13.60 per unit factory overhead cost

Clarinets:

Total factory overhead cost = Hours required for production of Flutes * The single plant-wide overhead rate

= 800 direct labor hours * $34 per direct labor hour

= $27200

Per unit factory overhead cost = Direct labor hours per unit * The single plant-wide overhead rate

= 1.6 direct labor hours per unit * $34 per direct labor hour

= $54.40 per unit factory overhead cost

Oboes:

Total factory overhead cost = Hours required for production of Flutes * The single plant-wide overhead rate

= 1430 direct labor hours * $34 per direct labor hour

= $48620

Per unit factory overhead cost = Direct labor hours per unit * The single plant-wide overhead rate

= 1.1 direct labor hours per unit * $34 per direct labor hour

= $37.40 per unit factory overhead cost

Total = $27200 + $27200 + $48620

= $103020