Question

The total factory overhead for Big Light Company is budgeted for the year at $807,500. Big Light manufactures two different products - night lights and desk lamps. Night lights is budgeted for 60,000 units. Each night light requires 1/2 hour of direct labor. Desk lamps is budgeted for 80,000 units. Each desk lamp requires 2 hours of direct labor.

a. Determine the total number of budgeted direct labor hours for year.

_______direct labor hours

b. Determine the single plantwide factory overhead rate using direct labor hours as the allocation base. Round your answer to two decimal places, if necessary.

$_____ per direct labor hour

c. Determine the factory overhead allocated per unit for each product using the single plantwide factory overhead rate calculated in (b). Round your answers to two decimal places, if necessary.

Night Lights $_________ per unit

Desk Lamps $_________ per unit

Answer 1

determine total number of budgeted direct labour hours for the year

total number of budgeted direct labor hours for the year is calculated

= night lamp labor hours + desk lamp labor hours

= ( 60000 * 1/2 ) + ( 80000 * 2 )

= 30000 + 160000

= 190000

calculated the single plantwide factory overhead rate

factory overhead rate = total factory overhead / total number of budgeted unit

= 807500 / 190000

= 4.25 per labour hour

calculate factory overhead cost per each unit

night lamp = 4.25 * 1/2

= 2..13 per unit

desk lamp = 4.25 * 2

= 8.50 per unit