valves, and follows per Unitper Unit per Unit 7,600 27,500 1,400 0.18 0.15 0.32

Question

valves, and follows per Unitper Unit per Unit 7,600 27,500 1,400 0.18 0.15 0.32 $51.4 9.9 70.6 S24.8 4.0 29.0 Valves Cams is $178230 Required: b. Determine the factory overhead and direct labor cost per unit for each product If required, round all per-unit answers to the nesrest cent c. Use the information provided to construct a budgeted gross profft report by product line for the year ended December 31, 20Y2 Include the gross profit as a percent of sales in the last line of your report, rounded to one decimal place. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Se sure to complete the statement heading Enter all amounts as positive numbers, except for a negative gross profitigross profit percentage of sales

Explanation / Answer

Calculation of plantwide factory overhead rate: Product Sales Volume (A) Direct labour hours pu (B) Total labour hours (A*B) Pistons 7600 0.18 1368 Valves 27500 0.15 4125 Cams 1400 0.32 448 Total 5941 Factory Overhead rate = Budgeted factory overhead/ total direct labour hours $178230/5941 30 Calculation of Factory Overhead and direct Labour cost per unit Pistons Valves Cams Direct labour hours pu (A) 0.18 0.15 0.32 Direct labour rate per hour (B) 18 18 18 Direct labour cost pu (A*B) 3.24 2.7 5.76 Direct factory overhead rate per hour (C) 30 30 30 Direct factory overhead cost per unit (A*C) 5.4 4.5 9.6 Calculation of gross profit Pistons Valves Cams No of units sold (A) 7600 27500 1400 Sales price per unit (B) 51.4 9.9 70.6 Sales Value (A*B) 390640 272250 98840 Less: Total cost ( Cost per unit* no of unit sold) 254144 308000 62104 Gross profit 136496 -35750 36736 % of sale 34.9 -13.1 37.2 Calculation of cost per unit Pistons Valves Cams Direct material cost pu 24.8 4 29 Direct labour cost pu 3.24 2.7 5.76 Direct factory overhead cost per unit 5.4 4.5 9.6 Total 33.44 11.2 44.36 From the above calculation it can be concluded that "cams" gross profit is highest as a percentage of sale while valves result in loss for the company.

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