Product Costs and Product Profitability Reports, using a Single Plantwide Factory Overhead Rate Elliott Engines Inc. produces three products—pistons, valves, and cams—for the heavy equipment industry. Elliott Engines has a very simple production process and product line and uses a single plantwide factory overhead rate to allocate overhead to the three products. The factory overhead rate is based on direct labor hours. Information about the three products for 20Y2 is as follows:   Budgeted Volume (Units) Direct Labor Hours Per Unit Price Per Unit Direct Materials Per Unit Pistons 11,000   0.30   $46   $22   Valves 21,000   0.15   11   4   Cams 2,000   0.20   61   26   The estimated direct labor rate is $26 per direct labor hour. Beginning and ending inventories are negligible and are, thus, assumed to be zero. The budgeted factory overhead for Elliott Engines is $191,800. If required, round all per unit answers to the nearest cent. a.  Determine the plantwide factory overhead rate. $fill in the blank 96da2800503d01d_1 per dlh b.  Determine the factory overhead and direct labor cost per unit for each product.   Direct Labor Hours Per Unit Factory Overhead Cost Per Unit Direct Labor Cost Per Unit Pistons fill in the blank 96da2800503d01d_2 dlh $fill in the blank 96da2800503d01d_3 $fill in the blank 96da2800503d01d_4 Valves fill in the blank 96da2800503d01d_5 dlh $fill in the blank 96da2800503d01d_6 $fill in the blank 96da2800503d01d_7 Cams fill in the blank 96da2800503d01d_8 dlh $fill in the blank 96da2800503d01d_9 $fill in the blank 96da2800503d01d_10     Learning Objective 2. c.  Use the information above to construct a budgeted gross profit 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. Enter all amounts as positive numbers, except for a negative gross profit/gross profit percentage of sales. Elliot Engines Inc. Product Line Budgeted Gross Profit Reports For the Year Ended December 31, 20Y2   Pistons Valves Cams Revenues  $fill in the blank d3768bff0078053_2 $fill in the blank d3768bff0078053_3 $fill in the blank d3768bff0078053_4 Product Costs       Direct materials  $fill in the blank d3768bff0078053_6 $fill in the blank d3768bff0078053_7 $fill in the blank d3768bff0078053_8 Direct labor  fill in the blank d3768bff0078053_10 fill in the blank d3768bff0078053_11 fill in the blank d3768bff0078053_12 Factory overhead  fill in the blank d3768bff0078053_14 fill in the blank d3768bff0078053_15 fill in the blank d3768bff0078053_16 Total Product Costs $fill in the blank d3768bff0078053_17 $fill in the blank d3768bff0078053_18 $fill in the blank d3768bff0078053_19 Gross profit $fill in the blank d3768bff0078053_20 $fill in the blank d3768bff0078053_21 $fill in the blank d3768bff0078053_22 Gross profit percentage of sales fill in the blank d3768bff0078053_23% fill in the blank d3768bff0078053_24% fill in the blank d3768bff0078053_25% d.  What does the report in (c) indicate to you? Valves have the lowest  gross profit as a percent of sales. Valves may require a higher  price or lower  cost to manufacture in order to achieve the same profitability as the other two products.

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Product Costs and Product Profitability Reports, using a Single Plantwide Factory Overhead Rate

Elliott Engines Inc. produces three products—pistons, valves, and cams—for the heavy equipment industry. Elliott Engines has a very simple production process and product line and uses a single plantwide factory overhead rate to allocate overhead to the three products. The factory overhead rate is based on direct labor hours. Information about the three products for 20Y2 is as follows:

  Budgeted Volume
(Units)
Direct Labor
Hours Per Unit
Price Per
Unit
Direct Materials
Per Unit
Pistons 11,000   0.30   $46   $22  
Valves 21,000   0.15   11   4  
Cams 2,000   0.20   61   26  

The estimated direct labor rate is $26 per direct labor hour. Beginning and ending inventories are negligible and are, thus, assumed to be zero. The budgeted factory overhead for Elliott Engines is $191,800.

If required, round all per unit answers to the nearest cent.

a.  Determine the plantwide factory overhead rate.
$fill in the blank 96da2800503d01d_1 per dlh

b.  Determine the factory overhead and direct labor cost per unit for each product.

  Direct Labor
Hours Per Unit
Factory Overhead
Cost Per Unit
Direct Labor
Cost Per Unit
Pistons fill in the blank 96da2800503d01d_2 dlh $fill in the blank 96da2800503d01d_3 $fill in the blank 96da2800503d01d_4
Valves fill in the blank 96da2800503d01d_5 dlh $fill in the blank 96da2800503d01d_6 $fill in the blank 96da2800503d01d_7
Cams fill in the blank 96da2800503d01d_8 dlh $fill in the blank 96da2800503d01d_9 $fill in the blank 96da2800503d01d_10
 
 

Learning Objective 2.

c.  Use the information above to construct a budgeted gross profit 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. Enter all amounts as positive numbers, except for a negative gross profit/gross profit percentage of sales.

Elliot Engines Inc.
Product Line Budgeted Gross Profit Reports
For the Year Ended December 31, 20Y2
  Pistons Valves Cams
Revenues  $fill in the blank d3768bff0078053_2 $fill in the blank d3768bff0078053_3 $fill in the blank d3768bff0078053_4
Product Costs      
Direct materials  $fill in the blank d3768bff0078053_6 $fill in the blank d3768bff0078053_7 $fill in the blank d3768bff0078053_8
Direct labor  fill in the blank d3768bff0078053_10 fill in the blank d3768bff0078053_11 fill in the blank d3768bff0078053_12
Factory overhead  fill in the blank d3768bff0078053_14 fill in the blank d3768bff0078053_15 fill in the blank d3768bff0078053_16
Total Product Costs $fill in the blank d3768bff0078053_17 $fill in the blank d3768bff0078053_18 $fill in the blank d3768bff0078053_19
Gross profit $fill in the blank d3768bff0078053_20 $fill in the blank d3768bff0078053_21 $fill in the blank d3768bff0078053_22
Gross profit percentage of sales fill in the blank d3768bff0078053_23% fill in the blank d3768bff0078053_24% fill in the blank d3768bff0078053_25%

d.  What does the report in (c) indicate to you?

Valves have the lowest  gross profit as a percent of sales. Valves may require a higher  price or lower  cost to manufacture in order to achieve the same profitability as the other two products.

 
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