Isaac Engines Inc. produces three productspistons, valves, and camsfor 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 20Y2 is as follows:

	Budgeted Volume (Units)		Direct Labor Hours Per Unit		Price Per Unit		Direct Materials Per Unit
Pistons	6,000		0.30		$40		$ 9
Valves	13,000		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. $fill in the blank 95a82e03b050fa6_1 per dlh

b. Determine the factory overhead and direct labor cost per unit for each product.

	Direct Labor Hours Per Unit	Factory Overhead Cost Per Unit	Direct Labor Cost Per Unit
Pistons	fill in the blank 95a82e03b050fa6_2 dlh	$fill in the blank 95a82e03b050fa6_3	$fill in the blank 95a82e03b050fa6_4
Valves	fill in the blank 95a82e03b050fa6_5 dlh	$fill in the blank 95a82e03b050fa6_6	$fill in the blank 95a82e03b050fa6_7
Cams	fill in the blank 95a82e03b050fa6_8 dlh	$fill in the blank 95a82e03b050fa6_9	$fill in the blank 95a82e03b050fa6_10

c. Use the information provided to construct a budgeted gross profit report by product line for the year ended December 31, 20Y2. Include the gross profit as a percent of sales in the last line of your report, rounded to one decimal place.

Isaac Engines Inc.
Product Line Budgeted Gross Profit Reports
For the Year Ended December 31, 20Y2
	Pistons	Valves	Cams
	$fill in the blank 36c013fde01bfe8_2	$fill in the blank 36c013fde01bfe8_3	$fill in the blank 36c013fde01bfe8_4
Product Costs
	$fill in the blank 36c013fde01bfe8_6	$fill in the blank 36c013fde01bfe8_7	$fill in the blank 36c013fde01bfe8_8
	fill in the blank 36c013fde01bfe8_10	fill in the blank 36c013fde01bfe8_11	fill in the blank 36c013fde01bfe8_12
	fill in the blank 36c013fde01bfe8_14	fill in the blank 36c013fde01bfe8_15	fill in the blank 36c013fde01bfe8_16
Total Product Costs	$fill in the blank 36c013fde01bfe8_17	$fill in the blank 36c013fde01bfe8_18	$fill in the blank 36c013fde01bfe8_19
Gross profit (loss)	$fill in the blank 36c013fde01bfe8_20	$fill in the blank 36c013fde01bfe8_21	$fill in the blank 36c013fde01bfe8_22
Gross profit percentage of sales	fill in the blank 36c013fde01bfe8_23%	fill in the blank 36c013fde01bfe8_24%	fill in the blank 36c013fde01bfe8_25%

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

Valves have the gross profit as a percent of sales. Valves may require a price or cost to manufacture in order to achieve a higher profitability similar to the other two products.