Question

Single plantwide factory overhead rate Bach Instruments Inc. makes three musical instruments: flutes, clarinets, and oboes. The budgeted factory overhead cost is $126,480. 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 2,100 units 0.4 Clarinets 800 1.5 Oboes 1,400 1.2 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

Bach Instruments Inc.

a. Single plantwide factory overhead rate:

= Total overhead/total labor hours = $126,480/3,720 = $34 per hour

b. Total Factory Overhead Cost

Labor Per Unit Cost Product units Total Costs

Hours (Labor hours x $34) per product

Flutes 0.4 $13.60 2,100 $28,560

Clarinets 1.5 51.00 800 40,800

Oboes 1.2 40.80 1,200 57,120

Total $126,480

Step-by-step explanation:

a) Data & Calculations:

Budgeted factory overhead = $126,480

Budgeted Direct labor Total

Production Volume hours per unit Hours

Flutes 2,100 units 0.4 840

Clarinets 800 1.5 1,200

Oboes 1,400 1.2 1,680

Total hours 3,720

c) Plantwide overhead allocation per unit = $126,480/3,720 = $34

d) The plantwide overhead rate is the dividend from total overhead costs and total labor hours. This rate is applied to the products based on the number of hours used to product a unit to obtain the per unit cost rate for each product. The resulting rate is further applied to the units produced in each product type to get the total cost of overhead for each product.