Product Costs and Product Profitability Reports, using a Single Plantwide Factory Overhead Rate

Elliott Engines Inc. produces three productspistons, valves, and camsfor the heavy equipment industry. Elliott 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	12,000		0.30		$49		$24
Valves	25,000		0.15		12		4
Cams	4,000		0.20		65		28

The estimated direct labor rate is $28 per direct labor hour. Beginning and ending inventories are negligible and are, thus, assumed to be zero. The budgeted factory overhead for Elliott Engines is $171,150.

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

a. Determine the plantwide factory overhead rate. $fill in the blank 023795010fa2f9d_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 023795010fa2f9d_2 dlh	$fill in the blank 023795010fa2f9d_3	$fill in the blank 023795010fa2f9d_4
Valves	fill in the blank 023795010fa2f9d_5 dlh	$fill in the blank 023795010fa2f9d_6	$fill in the blank 023795010fa2f9d_7
Cams	fill in the blank 023795010fa2f9d_8 dlh	$fill in the blank 023795010fa2f9d_9	$fill in the blank 023795010fa2f9d_10

Feedback

a. First calculate: Volume x direct labor hours per unit = direct labor hours per product. Add all product hours for total direct labor hours. Next: Budgeted factory overhead cost total hours = Rate per direct labor hour

b. Calculate: Factory overhead cost per unit = Rate from Req. (a) x Direct labor hours per unit Direct labor cost per unit = Direct labor rate x Direct labor hours per unit

Learning Objective 2.

c. Use the information above 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. Enter all amounts as positive numbers, except for a negative gross profit/gross profit percentage of sales.

Elliot Engines Inc.
Product Line Budgeted Gross Profit Reports
For the Year Ended December 31, 20Y2
	Pistons	Valves	Cams
Revenues	$fill in the blank bf673007e053fed_2	$fill in the blank bf673007e053fed_3	$fill in the blank bf673007e053fed_4
Product Costs
Direct materials	$fill in the blank bf673007e053fed_6	$fill in the blank bf673007e053fed_7	$fill in the blank bf673007e053fed_8
Direct labor	fill in the blank bf673007e053fed_10	fill in the blank bf673007e053fed_11	fill in the blank bf673007e053fed_12
Factory overhead	fill in the blank bf673007e053fed_14	fill in the blank bf673007e053fed_15	fill in the blank bf673007e053fed_16
Total Product Costs	$fill in the blank bf673007e053fed_17	$fill in the blank bf673007e053fed_18	$fill in the blank bf673007e053fed_19
Gross profit	$fill in the blank bf673007e053fed_20	$fill in the blank bf673007e053fed_21	$fill in the blank bf673007e053fed_22
Gross profit percentage of sales	fill in the blank bf673007e053fed_23%	fill in the blank bf673007e053fed_24%	fill in the blank bf673007e053fed_25%