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.
$ per direct labor hour
b. Use the overhead rate in (a) to determine the amount of total and per-unit overhead allocated to each of the three products, rounded to the nearest dollar.
Total Per Unit
Factory Overhead Cost Factory Overhead Cost
Flutes $ $
Clarinets
Oboes
Total $

Answer 1

Answer:

Results are below.

Explanation:

Giving the following information:

Flutes= 2,000*2 = 4,000 hours

Clarinets= 1,500*3 = 4,500 hours

Oboes= 1,750*1.5 = 2,625 hours

Total direct labor hours = 11,125

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 / 11,125

Predetermined manufacturing overhead rate= $265 per direct labor hour

Now, we can allocate to each product:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Flutes= 4,000* 265= 1,060,000

Clarinets= 4,500*265= 1,192,500

Oboes= 2,625*265= 695,625

Unitary:

Flutes= 265*2= 530

Clarinets= 265*3= 795

Oboes= 265*1.5= 397.5