Question

Bach Instruments Inc. makes three musical instruments: flutes, clarinets, and oboes. The budgeted factory overhead cost is $137,760. 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	2,200	units	0.6
Clarinets	500		1.5
Oboes	1,100		1.1

If required, round all per unit answers to the nearest cent.

a. Determine the single plantwide overhead rate.

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

a.

	Budgeted Production Volume (i)	Direct Labor Hours Per Unit (ii)	Total direct labor hours (i x ii)
Flutes	2,200	0.6	1,320
Clarinets	500	1.5	750
Oboes	1,100	1.1	1,210
Total			3,280

Budgeted factory overhead cost = $137,760

Single plantwide overhead rate = Budgeted factory overhead cost/Total direct labor hours

= 137,760/3,280

= $42 per direct labor hour

b.

	Budgeted Production Volume (i)	Direct labor hour per unit (ii)	Plantwide overhead rate (iii)	Per unit Factory Overhead Cost iv = (ii x iii)	Total Factory Overhead Cost (i x iv)
Flutes	2,200	0.6	42	25.2	55,440
Clarinets	500	1.5	42	63	31,500
Oboes	1,100	1.1	42	46.2	50,820
Total					$137,760