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### Step 2: Compute the Plantwide Overhead Rate Using Budgeted Direct Labor Hours (continued)
The plantwide overhead rate is calculated by dividing the total budgeted overhead costs by the total budgeted direct labor hours:
\[ \text{Plantwide Overhead Rate} = \frac{\text{Total Overhead Costs}}{\text{Total Direct Labor Hours}} \]
\[ \text{Plantwide Overhead Rate} = \frac{\$440,000}{2,200 \text{ hours}} = \$200 \text{ per hour} \]
### Step 3: Compute Overhead Cost Per Unit for Each Model Using the Plantwide Overhead Rate
Now we use the overhead rate to calculate the overhead cost per unit for each model.
- **Standard model**: 7 hours/unit × $200/hour = $1,400 per unit
- **Deluxe model**: 13 hours/unit × $200/hour = $2,600 per unit
This gives us the overhead costs per unit for each type of jet ski.
