The total factory overhead for Big Light Company is budgeted for the year at $2,

Question

The total factory overhead for Big Light Company is budgeted for the year at $2,039,800. Big Light manufactures two different products night lights and desk lamps. Night lights is budgeted for 17,600 units. Each night light requires two hour of direct labor. Desk lamps is budgeted for 19,600 units. Each desk lamp requires three hours of direct labor. a Determine the total number of budgeted direct labor hours for year. b Determine the single plantwide factory overhead rate using direct labor hours as the allocation base. Round your answer to two decimal places, if necessary c Determine the factory overhead allocated per unit for each product using the single plantwide factory overhead rate calculated in (b). Round your answers to two decimal places, if necessary. Night Lights Desk Lamps per unit per unit

Explanation / Answer

Answer a Calculation of total number of budgeted direct labour hours for year Product No.of units Direct labour hours per unit Total Direct Labour hours A B C B*C Night Lights 17600 2 35200 Desk Lamps 19600 3 58800 Budgeted Direct Labour hours for Year 94000 Answer b Single Plantwide overhead rate = Budgeted Factory Overheads for the year / Budgeted direct labour hours Single Plantwide overhead rate = $20,39,800 / 94000 hours = $21.70 per direct labour hour Answer c Calculation of Factory overhead allocated per unit of each product Night Lights Desk Lamps Direct Labour Hours 35200 58800 x Single Plantwide overhead rate $21.70 $21.70 Overheads applied $763,840 $1,275,960 / No.of units 17600 19600 Factory Overhead per unit $43.40 $65.10

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