Healthy Earth Products Inc. produces fertilizer and distributes the product by u

Question

Healthy Earth Products Inc. produces fertilizer and distributes the product by using company trucks. The controller of the company uses budgeted fleet hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data:

Budgeted output units                                                                            800 truckloads

Budgeted fleet hours                                                                                       520 hours

Budgeted pounds of fertilizer                                                         28,000,000 pounds

Budgeted variable manufacturing overhead costs for 800 loads             $93,600.00

Actual output units produced and delivered                                     760 truckloads

Actual fleet hours                                                                                             460 hours

Actual pounds of fertilizer produced and delivered                  29,400,000 pounds

Actual variable manufacturing overhead costs                                          $91,200.00

What is the budgeted variable overhead cost rate per output unit?

Please Show Work! Thanks

Explanation / Answer

Solution:

Budgeted variable overhead cost rate per output unit = Total Budgeted variable manufacturing overhead costs for 800 loads / 800 loads

= $93,600 / 800

= $117 per load or unit

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