Question

Multiple Production Department Factory Overhead Rates

The total factory overhead for Bardot Marine Company is budgeted for the year at $348,000, divided into two departments: Fabrication, $162,000, and Assembly, $186,000. Bardot Marine manufactures two types of boats: speedboats and bass boats. The speedboats require one direct labor hour in Fabrication and four direct labor hours in Assembly. The bass boats require one direct labor hour in Fabrication and four direct labor hours in Assembly. Each product is budgeted for 3,000 units of production for the year.

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

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

Fabrication _______	direct labor hours
Assembly ________	direct labor hours

b. Determine the departmental factory overhead rates for both departments.

Fabrication________	$ per dlh
Assembly_________	$ per dlh

c. Determine the factory overhead allocated per unit for each product using the department factory overhead allocation rates.

Speedboat:_________	$ per unit
Bass boat:__________	$ per unit

Answer 1

The total factory overhead for Bardot Marine Company is budgeted for the year at $348,000, divided into two departments: Fabrication, $162,000, and Assembly, $186,000. Bardot Marine manufactures two types of boats: speedboats and bass boats. The speedboats require one direct labor hour in Fabrication and four direct labor hours in Assembly. The bass boats require one direct labor hour in Fabrication and four direct labor hours in Assembly. Each product is budgeted for 3,000 units of production for the year.

a) Total number of budgeted direct labor hours for the year in each department.

	Direct labor hours
Fabrication	3,000 x 1 + 3,000 x 1 = 6,000
Assembly	3,000 x 4 + 3,000 x 4 = 24,000

b) Departmental factory overhead rates for both departments.

	Departmental factory overhead rate = Departmental overheads/Number of direct labor hours
Fabrication	162,000/6,000 = $27 per direct labor hour
Assemble	186,000/24,000 = $7.75 per direct labor hour

c) Factory overhead allocated per unit for each product using the department factory overhead allocation rates

	Factory overhead allocated per unit
Speed boat	1 x 27 + 4 x 7.75 = 27 + 31 = $58
Bass boat	1 x 27 + 4 x 7.75 = 27 + 31 = $58

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