Single Plantwide Factory Overhead Rate Mozart Music Inc. makes three musical ins
ID: 342101 • Letter: S
Question
Single Plantwide Factory Overhead Rate
Mozart Music Inc. makes three musical instruments: trumpets, tubas, and trombones. The budgeted factory overhead cost is $119,680. 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:
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.
Budgeted Production Volume Direct Labor Hours Per Unit Trumpets 2,000 units 0.5 Tubas 600 1.6 Trombones 1,300 1.2Explanation / Answer
a) Calculation of single plantwide factory overhead rate
2000 X 0.5 + 600 X 1.6 + 1300 X 1.2 = 3520 direct labour hours
Overhead rate per direct labour hour = 119680 / 3520 = 34 per direct labour hour
b) Calculation of total and per-unit factory overhead allocated to each of the three products.
Total factory overhead Per unit factory overhead Trumpets 2000 X 0.5 X 34 = 34000 34000 / 2000 = 17 per unit Tubas 600 X 1.6 X 34 = 32640 32640 / 600 = 54.4 per unit Trombones 1300 X 1.2 X 34 = 53040 53040 / 1300 = 40.8 per unit Total 119680