ple Production Department Factory Overhead Rates Spotted Cow Dairy Company manuf

Question

ple Production Department Factory Overhead Rates Spotted Cow Dairy Company manufactures three products-whole milk, skim milk, and cream-in two production departments, Blending and Packing. The factory overhead for Spotted Cow Dairy is $476,700. The three products consume both machine hours and direct labor hours in the two production departments as follows: Direct Labor Hours Machine Hours Blending Department Whole milk Skim milk Cream 420 570 1,400 2,180 Packing Department Whole milk Skim milk 1,360 190 210 190 840 am 3,100 Total 1,990 5,280

Explanation / Answer

Answer 1 Calculation of multiple production department factory overhead rates Blending department = Factory Overhead associated with Blending department / Total Direct Labor hours associated with Blending department Blending department = $238000 / 1400 hours = $170 per direct labor hour Packing department = Factory Overhead associated with Packing department / Total Machine hours associated with Packing department Packing department = $238700 / 3100 hours = $77 per machine hour Answer 2 Determination of product factory overhead cost Whole Milk Skim Milk Cream Blending department factory overhead $112,200.00 $71,400.00 $54,400.00 Packing department factory overhead $104,720.00 $64,680.00 $69,300.00 Total Factory Overheads $216,920.00 $136,080.00 $123,700.00

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