Question

Single Plantwide Factory Overhead Rate

Mozart Music Inc. makes three musical instruments: trumpets, tubas, and trombones. The budgeted factory overhead cost is $150,360. 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	2,000	units	0.5
Tubas	600		1.5
Trombones	1,400		1.2

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

Total Labour hours
Product		Production	DLH per unit	Total DLH
Trumpets		2000	0.5	1000
Tubas		600	1.5	900
Trombones		1400	1.2	1680
Total Labour hours				3580
Req a:
Factory OH rate per hour
Total Overheads				150360
Divide: Total Labour hours				3580
OH rate per hour				42
Req b:
Product	Total DLH	OH rate	Total OH
Trumpets	1000	$42	42000
Tubas	900	42	37800
Trombones	1680	$42	70560
Product	Total OH	Units	OH cost per unit
Trumpets	42000	$2,000	21
Tubas	37800	$600	$63
Trombones	70560	1400	50.4
		Total Factory OH		Per Unit OH
Trumpets		42000		21
Tubas		37800		63
Trombones		$70,560		50.4
Total		$150,360