Bugaboo Co

question 108

Short Answer

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:
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?

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Definitions:

Simple Sentence

Sentence with one main clause (a single subject and a single predicate).

Independent Thought

The ability to think and form judgments without undue influence from others.

Subordinate Clauses

Clauses that cannot stand alone as a sentence because they are dependent on a main clause to make sense.

Dependent Clause

A group of words that contains a subject and verb but does not express a complete thought and cannot stand alone as a sentence.