Question

Bach Instruments Inc. makes three musical instruments: flutes, clarinets, and oboes. The budgeted factory overhead cost is $2,948,125. 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 2,000 units 2.0 Clarinets 1,500 3.0 Oboes 1,750 1.5 a. Determine the single plantwide overhead rate.

Answer 1

Answer:

Predetermined manufacturing overhead rate= $391.78 per direct labor hour

Explanation:

Giving the following information:

Budgeted factory overhead= $2,948,125.

Direct labor hours:

Flutes= 2,000*2= 4,000

Clarinets= 1,500*3= 4,500

Oboes= 1,750*1.5= 2,625

Total direct labor hours= 7,525

To calculate the predetermined manufacturing overhead rate we need to use the following formula:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= 2,948,125/7,525

Predetermined manufacturing overhead rate= $391.78 per direct labor hour