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

Flint Engine Parts Inc. (FEP) produces three productspistons, valves, and camsfor the heavy equipment industry. FEP 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 2014 is as follows:

	Budgeted Volume (Units)		Direct Labor Hours Per Unit		Price Per Unit		Direct Materials Per Unit
Pistons	8,000		0.30		$40		$20
Valves	18,000		0.15		10		3
Cams	2,000		0.20		54		23

The estimated direct labor rate is $23 per direct labor hour. Beginning and ending inventories are negligible and are, thus, assumed to be zero. The budgeted factory overhead for FEP is $99,000.

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.

	Direct Labor Hours Per Unit	Factory Overhead Cost Per Unit	Direct Labor Cost Per Unit
Pistons		$	$
Valves		$	$
Cams		$	$

Hide Feedback

Incorrect

Hide

c. Use the information above to construct a budgeted gross profit report by product line for the year ended December 31, 2014. 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.

Flint Engine Parts Inc.

Product Line Budgeted Gross Profit Reports

For the Year Ended December 31, 2014

Pistons

Valves

Cams

$

$

$

$

$

$

$

$

$

Gross profit

$

$

$

Gross profit percentage of sales

%

%

		%