Question

Bugaboo Co. manufactures three types of cookies: Fluffs, Crinkles, and Snaps. The production process is relatively simple, and factory overhead costs are allocated to products using a single plantwide factory rate based on direct labor hours. Information for the month of May, Bugaboo's first month of operations, follows:

Budgeted Unit Volume Direct Labor Hours per unit
Fluffs 80,000 boxes 0.10
Crinkles 60,000 boxes 0.20
Snaps 20,000 boxes 0.50
Bugaboo has budgeted direct labor costs for May at $8.50 per hour. Budgeted direct materials costs for May are: Fluffs, $0.75/unit; Crinkles $0.40/unit; and Snaps $0.30/unit.
Bugaboo's budgeted overhead costs for May are:
Indirect Labor $280,000
Utilities $65,000
Supplies $45,000
Depreciation $30,000
Total $420,000
Assume that Bugaboo sells all the boxes it produces in May. Round your answers to two decimal places, if necessary.
a. Compute Bugaboo's plantwide factory overhead rate for May.
$_______per direct labor hour
b. Compute May's product cost for each type of cookie.
Cost per box Fluffs Crinkles Snaps
Total manufacturing cost $____ $____ $ ____

Answer 1

Bugaboo Co.

a. Bugaboo's plantwide factory overhead rate for May.

$14 per direct labor hour

b. May's product cost for each type of cookie.

Fluffs Crinkles Snaps

Cost per box $3.00 $4.90 $11.55

Total manufacturing cost $240,000 $294,000 $231,000

Step-by-step explanation:

a) Data and Calculations:

Budgeted Unit Volume Direct Labor Hours Total DLH

per unit

Fluffs 80,000 boxes 0.10 8,000

Crinkles 60,000 boxes 0.20 12,000

Snaps 20,000 boxes 0.50 10,000

Total direct labor hours for the three products = 30,000

Budgeted overhead costs for May are:

Indirect Labor $280,000

Utilities $65,000

Supplies $45,000

Depreciation $30,000

Total $420,000

Overhead rate per direct labor hour = $14 ($420,000/30,000)

Fluffs Crinkles Snaps

Direct labor hours 8,000 12,000 10,000

Direct materials per unit $0.75 $0.40 $0.30

Direct materials $60,000 $24,000 $6,000

Direct labor costs 68,000 102,000 85,000

Overhead allocated 112,000 168,000 140,000

Total production costs $240,000 $294,000 $231,000

Cost per box $3.00 $4.90 $11.55