Orange County Engine Parts Inc. (OCEP) produces three productspistons, valves, and camsfor the heavy equipment industry. OCEP 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 (dlh). Information about the three products for 2016 is as follows:

	Budgeted Volume	Direct Labor Hours	Price	Direct Materials
	(Units)	per Unit	per Unit	per Unit
Pistons	7,600	0.18	$50.9	$24.8
Valves	28,600	0.15	9.9	4.2
Cams	1,500	0.31	70.9	28.7

The estimated direct labor rate is $17 per direct labor hour. Beginning and ending inventories are negligible and are, thus, assumed to be zero. The budgeted factory overhead for OCEP is $159,198.

Required:

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, 2016. Include the gross profit as a percent of sales in the last line of your report, rounded to one decimal place. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. Enter all amounts as positive numbers, except for a negative gross profit/gross profit percentage of sales.

D.

What does the report in (C) indicate to you?

* If required, round all per-unit answers to the nearest cent.

A. Determine the plantwide factory overhead rate. If required, round all per-unit answers to the nearest cent.

per dlh

B. Determine the factory overhead and direct labor cost per unit for each product. If required, round all per-unit answers to the nearest cent.

Direct Labor Hours

Factory Overhead

Direct Labor

Per Unit

Cost Per Unit

Cost Per Unit

Pistons

Valves

Cams

C. Use the information provided to construct a budgeted gross profit report by product line for the year ended December 31, 2016. Include the gross profit as a percent of sales in the last line of your report, rounded to one decimal place. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. Enter all amounts as positive numbers, except for a negative gross profit/gross profit percentage of sales.

Question not attempted.

Score: 0/115

Orange County Engine Parts Inc.

Product Line Budgeted Gross Profit Reports

1		Pistons	Valves	Cams
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