# Juguette’s Boise plant produce

Juguette’s Boise plant produces two types of battery-operatedtoys: robots and race cars. The Boise plant uses a plantwide ratebased on direct labor hours to assign its overhead costs. Thecompany has the following estimated and actual data for the comingyear:

 Estimated overhead \$350,000 Expected activity (direct labor hours) 50,000 Actual activity (direct labor hours): Robots 10,000 Race cars 40,000 Units produced: Robots 50,000 Race cars 250,000
1. Calculate the predetermined plantwide overhead rate.
2. Calculate the applied overhead for each product.
3. Calculate the overhead cost per unit for each product.

Solution:

Note: Here direct labor hours is the allocation base / activitybase

Therefore,

Predetermined plantwide Overhead rate = Estimated Overhead Costs/ Estimated direct labor hours

= \$350,000 / 50,000 direct labor hours

= \$7 per direct labor hours

Note: Here Actual activity output for robots = 10,000 directlabor hours

Actual activity output for race cars = 40,000direct labor hours

Therefore,

Applied Overhead for Robots = \$7 * 10,000 direct labor hours

= \$70,000

Applied Overhead for Race Cars = \$7 * 40,000 direct laborhours

= \$280,000

Overhead cost per unit for robots = \$70,000 / 50,000 units

= \$1.40

Overhead Cost per unit for Race cars = \$280,000 / 250,000units

= \$1.12

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