EX $4-4$ Product costs and product profitability reports, using a single plantwide factory overhead rate

c$.$ Pistons gross profit, $$39,000$

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Pistons Valves Cams

Obj. $2$

Kao Engines Inc. produces three products$$pistons$,$ valves, and cams$$for the heavy equipment industry. Kao Engines$$ production process uses a single plantwide factory overhead rate based upon direct labor hours to allocate overhead to the three products. The three products for $20$Y$2$ are as follows:

Budgeted Volume $($Units$)$

$7,500$

$16,0004,000$

Direct Labor Hours per Unit $0\mathrm{.}400\mathrm{.}500\mathrm{.}20$

Direct Materials per Unit

$$126$

$20$

Selling Price per Unit

$$407560$

The estimated direct labor rate is $$25$ per direct labor hour. Beginning and ending inventories are neg$-$ligible and are, thus, assumed to be zero. The budgeted factory overhead for Kao Engines is $$377,600.$ a$.$ Determine the plantwide factory overhead rate. b$.$ Determine the factory overhead and direct labor cost per unit for each product. c$.$ Use the information provided to construct a budgeted gross profit report by product line for the year ended December $31,20$Y$2.$ Include the gross profit as a percent of sales in the last line of your report, rounded to one decimal place.

d$.$

b$.$What does the report in $($c$)$ indicate to you?