More Info actu er cu d qua lunge Manufacturing produces surfboards. The company

Question

More Info actu er cu d qua lunge Manufacturing produces surfboards. The company u or-hours. Most of the company's production and sales occu lar Wholesale, due to large fluctuations in price. The owner ve been provided the following budgeted information for the (Click the icon to view the budgeted information.) $24 per hour. The budgeted variable manufacturing overhead rate is $17 per direct It takes 1 direct manufacturing labor-hour to make each board. The actual direct material cost is $10.00 per board. The actual direct manufacturing labor rate is manufacturing labor-hour. Budgeted fixed manufacturing overhead costs are $7,500 each quarter ad the requirements ead c Data Table PrintDone d thi nnual budgeted manufacturing overhead rate for the year. (Abbreviation Quarter 2 3 4 Total cost Surfboards manufactured and sold +Fixed OH per unitper unit 775 300 250 175 7500 76 Print Done 7500 81

Explanation / Answer

For calculating manufacturing cost per unit, following should be added

Direct material

+ Direct labour

+ variable overhead

+fixed manufacturing overhead

After adding the above we will arrive at Total manufacturing cost

And this is important to Note that variable costs remain fixed on per unit basis and changes in totality whereas fixed Cost remain same in totality but changes on per unit basis.

Thus for both quarters Direct material, ddirect labour, variable overhead costs will remain same on per unit basis i.e. $10, $24 & $17 respectively

Fixed overhead rate :

Quarter 2: $7500/300hours= $25 per direct labour hour

Quarter 3: $7500/250 hours =$30 per direct labour hour

Now the annual overhead rate is :

Annual fixed overheads/ Total direct labour hours per annum

=($7500*4)/(775+300+250+175)

=$30000/1500= $20 per hour

P.S where in question they require cost per unit

And you entered total cost in totality.

Do give your feedback!! Happy Learning :) :)

Direct material p.u Direct labour p.u variable overhead p.u Fixed overhead per uNit Total cost per unit Quarter 1 10 24 17 25 76 Quarter 2 10 24 17 30 81 Annual 10 24 17 20 71

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