Bugaboo Co Assume That Bugaboo Sells All the Boxes It Produces in Snaps

question 85

Essay

Bugaboo Co. manufactures three types of cookies: Fluffs, Crinkles, and Snaps. The production process is relatively simple, and factory overhead costs are allocated to products using a single plantwide factory rate based on direct labor hours. Information for the month of May, Bugaboo's first month of operations, follows: Bugaboo has budgeted direct labor costs for May at $8.50 per hour. Budgeted direct materials costs for May are: Fluffs, $0.75/unit; Crinkles $0.40/unit; and Snaps $0.30/unit.
Bugaboo's budgeted overhead costs for May are: $$\begin{array} { l r } \text { Indirect labor } & \$ 280,000 \\\text { Utilities } & 65,000 \\\text { Supplies } & 45,000 \\\text { Depreciation } & 30,000 \\\text { Total } & \$ 420,000\end{array}$$ Assume that Bugaboo sells all the boxes it produces in May.
a) Compute Bugaboo's plantwide factory overhead rate for May.
b) Compute the product cost in May for each type of cookie.
c) Does Bugaboo's use of a plantwide factory overhead rate in any way distort the product costs for May?

---

Definitions:

Lung

A pair of organs situated within the ribcage, responsible for the process of respiration through the exchange of oxygen and carbon dioxide.

Depression

A psychological condition marked by a continuous low mood or lack of enjoyment in activities, leading to considerable disruption in daily functioning.

Olfaction

The sense of smell, a chemical sensing system that detects odor molecules in the environment.

Smelling

The act or process of perceiving odors or scents through the nose.