FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Isaac Engines Inc. produces three products—pistons, valves, and cams—for the heavy equipment industry. Isaac Engines has a very simple production process and product line and uses a single plantwide factory
| Budgeted Volume (Units) | Direct Labor Hours per Unit | Price per Unit | Direct Materials per Unit | |
|---|---|---|---|---|
| Pistons | 6,000 | 0.30 | $40 | $ 9 |
| Valves | 13,000 | 0.50 | 21 | 5 |
| Cams | 1,000 | 0.10 | 55 | 20 |
The estimated direct labor rate is $20 per direct labor hour. Beginning and ending inventories are negligible and are, thus, assumed to be zero. The budgeted factory overhead for Isaac Engines is $235,200.
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Determine the plantwide factory overhead rate.
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Determine the factory overhead and direct labor cost per unit for each product.
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Use the information provided 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.
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