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The total factory overhead for Big Light Company is budgeted for the year at $807,500. Big Light manufactures two different products - night lights and
The total factory overhead for Big Light Company is budgeted for the year at $807,500. Big Light manufactures two different products - night lights and desk lamps. Night lights is budgeted for 60,000 units. Each night light requires 1/2 hour of direct labor. Desk lamps is budgeted for 80,000 units. Each desk lamp requires 2 hours of direct labor. Determine (a) the total number of budgeted direct labor hours for year, (b) the single plantwide factory overhead rate using direct labor hours as the allocation base, and (c) the factory overhead allocated per unit for each product using the single plantwide factory overhead rate calculated in (b). Bugaboo Co. manufactures three types of cookies: Fluffs, Crinkles, and Snaps. The production process is relatively simple, and factory overhead costs are allocated to products using a single plantwide factory rate based on direct labor hours. Information for the month of May, Bugaboo's first month of operations, follows: Fluffs Crinkles Snaps Budgeted Unit Volume 80,000 boxes 60,000 boxes 20,000 boxes Direct Labor Hours per unit 0.10 0.20 0.50 Bugaboo has budgeted direct labor costs for May at $8.50 per hour. Budgeted direct materials costs for May are: Fluffs, $0.75/unit; Crinkles $0.40/unit; and Snaps $0.30/unit. Bugaboo's budgeted overhead costs for May are: Indirect labor Utilities Supplies Depreciation Total $280.000 65,000 45,000 30,000 $420,000 Assume that Bugaboo sells all the boxes it produces in May. (a) Compute Bugaboo's plantwide factory overhead rate for May. (b) Compute the product cost in May for each type of cookie. (c) Does Bugaboo's use of a plantwide factory overhead rate in any way distort the product costs for May
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