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	8,000		0.20		$46		$22
Valves	27,000		0.15		11		4
Cams	4,000		0.30		61		26

The estimated direct labor rate is $26 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 $198,650.

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

a. Determine the plantwide factory overhead rate. $fill in the blank 4f15fcf10066fbb_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 4f15fcf10066fbb_2 dlh	$fill in the blank 4f15fcf10066fbb_3	$fill in the blank 4f15fcf10066fbb_4
Valves	fill in the blank 4f15fcf10066fbb_5 dlh	$fill in the blank 4f15fcf10066fbb_6	$fill in the blank 4f15fcf10066fbb_7
Cams	fill in the blank 4f15fcf10066fbb_8 dlh	$fill in the blank 4f15fcf10066fbb_9	$fill in the blank 4f15fcf10066fbb_10

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
	$fill in the blank 7750f8fb7f9a00f_2	$fill in the blank 7750f8fb7f9a00f_3	$fill in the blank 7750f8fb7f9a00f_4
Product Costs
	$fill in the blank 7750f8fb7f9a00f_6	$fill in the blank 7750f8fb7f9a00f_7	$fill in the blank 7750f8fb7f9a00f_8
	fill in the blank 7750f8fb7f9a00f_10	fill in the blank 7750f8fb7f9a00f_11	fill in the blank 7750f8fb7f9a00f_12
	fill in the blank 7750f8fb7f9a00f_14	fill in the blank 7750f8fb7f9a00f_15	fill in the blank 7750f8fb7f9a00f_16
Total Product Costs	$fill in the blank 7750f8fb7f9a00f_17	$fill in the blank 7750f8fb7f9a00f_18	$fill in the blank 7750f8fb7f9a00f_19
Gross profit	$fill in the blank 7750f8fb7f9a00f_20	$fill in the blank 7750f8fb7f9a00f_21	$fill in the blank 7750f8fb7f9a00f_22
Gross profit percentage of sales	fill in the blank 7750f8fb7f9a00f_23%	fill in the blank 7750f8fb7f9a00f_24%	fill in the blank 7750f8fb7f9a00f_25%

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

Valves have the (Highest or Lowest) gross profit as a percent of sales. Valves may require a (Higher or Lower) price or (Higher or Lower) cost to manufacture in order to achieve the same profitability as the other two products.