Bugaboo has budgeted direct labor costs for May at $8.50 per hour. Budgeted dire

Question

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.

Assume that Bugaboo sells all the boxes it produces in May. Round your answers to two decimal places, if necessary.

a. Compute Bugaboo's plantwide factory overhead rate for May.

b. Compute May's product cost for each type of cookie.

c. Does Bugaboo's use of a plantwide factory overhead rate in any way distort May's product costs?

Explanation / Answer

Solution.

a. Computetion of Bugaboo's plantwide factory overhead rate for May.

plantwide factory overhead rate for May

Fluffs       = 8,000

Crinkles   = 12,000

Snaps     = 10,000

b. Computetion of May's product cost for each type of cookie.

c. Does Bugaboo's use of a plantwide factory overhead rate in any way distort May's product costs?

Yes Bugaboo's plantwide factory overhead rate basis is distort may product cost.

Due to this basis Snaps cost of production is too high compresion than other two item.

A B C (AXB) D (C X $8.5) E (D / A) Item Unit Volume Labor hour per unit Total labour hour Labor cost $8.5 per hour Per unit Fluffs 80,000 0.10               8,000                68,000.0 $       0.85 Crinkles 60,000 0.20            12,000              102,000.0 $       1.70 Snaps 20,000 0.50            10,000                85,000.0 $       4.25 Direct labor cost per unit for may Fluffs $             0.85 Per Box Crinkles $             1.70 Per Box Snaps $             4.25 Per Box

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.