Hydro Sports budgets overhead cost of $420,000 for the year. The company manufactures two types of jet skis: standard and deluxe.

 Hydro Sports budgets overhead cost of $420,000 for the year. The company manufactures two types of jet skis: standard and deluxe. Budgeted direct labor hours per unit are 8 for the standard model and 12 for the deluxe model. The company budgets production of 100 units of the standard model and 100 units of the deluxe model for the year.
 
1. Compute the total number of budgeted direct labor hours for the year.

2. Compute the plantwide overhead rate using budgeted direct labor hours.

3. Compute overhead cost per unit for each model using the plantwide overhead rate. Actual direct labor hours per unit are 8 for the standard model and 12 for the deluxe model.

 

Explanation
2.
Plantwide overhead rate = $420,000/2,000 DLH = $210 per DLH

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