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Isaac Engines Inc. produces three products-pistons, valves, and cams-for the heavy equipment industry. Isaac Engines has a very simple production process and product line and
Isaac Engines Inc. produces three products-pistons, valves, and cams-for the heavy equipment industry. Isaac Engines has a very simple production process and product line and uses a single plantwide factory overhead rate to allocate overhead to the three products. The factory overhead rate is based on direct labor hours. Information about the three products for 2012 is as follows: Direct Labor Direct Materials Budgeted Volume (Units) Price Per Unit Hours Per Unit Per Unit Pistons 0.30 $40 $ 9 6,000 13,000 Valves 0.50 21 5 Cams 1,000 0.10 55 20 The estimated direct labor rate is $20 per direct labor hour. Beginning and ending inventories are negligible and are, thus, assumed to be zero. The budgeted factory overhead for Isaac Engines is $235,200. If required, round all per unit answers to the nearest cent. a. Determine the plantwide factory overhead rate. $ per dlh b. Determine the factory overhead and direct labor cost per unit for each product. Single Plantwide Factory Overhead Rate The total factory overhead for Bardot Marine Company is budgeted for the year at $875,000. Bardot Marine manufactures two types of boats: speedboats and bass boats. The speedboat and bass boat each require five direct labor hours for manufacture. Each product is budgeted for 5,000 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. direct labor hours b. Determine the single plantwide factory overhead rate. per dih c. Determine the factory overhead allocated per unit for each product using the single plantwide factory overhead rate. Speedboat S per unit Bass boat per unit d. What does the report in (c) indicate to you? price or cost to manufacture in order to Valves have the gross profit as a percent of sales. Valves may require a achieve a higher profitability similar to the other two products
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