Elliott Engines Inc. produces three products-pistons, valves, and cams-for the h

Question

Elliott Engines Inc. produces three products-pistons, valves, and cams-for the heavy equipment industry. Eliott 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 $45 17 60 Direct Materials Per Unit Pistons Valves Cams 5,000 12,500 1,500 0.50 0.30 0.20 $ 8 40 The estimated direct labor rate is s30 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 $163,750 If required, round all per unit answers to the nearest cent a. Determine the plantwide factory overhead rate. per dih 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 dih dih PreviousNext

Explanation / Answer

a) Units DL Hrs per unit Total labours hours Budgetd FOH 163750 Pistons 5000 0.5 2500 Budgeted D LHRS 6550 Valves 12500 0.3 3750 Cams 1500 0.2 300 Plantwide OH rate 25 6550 b) (a)*$30 (a)*$25 DL Hours per unit (hrs ) (a) Direct labour cost per unit $ (b) Factory OH cost per unit $ (C ) Pistons 0.5 15 12.5 Valves 0.3 9 7.5 Cams 0.2 6 5 c) Budgeted Gross profit reports For the year ended 31st Dec 20Y2 Particulars Pistons Valves Cams a) Revenue 225000 212500 90000 [ (a)*45/17/60 ] 225000 212500 90000 b) Product costs i. Direct materials 40000 37500 60000 ( 5000*8) ( 12500*4) ( 1500*40) ii. Direct labour 75000 112500 9000 ( 5000*15) ( 12500* 9) ( 1500*6) iii. Factory OH 62500 93750 7500 ( 5000* 12.5) (12500*7.5) ( 1500*5) Total product cost 177500 243750 76500 Gross profit 47500 -31250 13500 ( loss ) GP percnatge of sale                  21.11                           15.00

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