10.Multiple Production Department Factory Overhead Rates Spotted Cow Dairy Compa
ID: 2548525 • Letter: 1
Question
10.Multiple 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 $395,500. 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 750 1,030 Skim milk 480 830 Cream 370 640 1,600 2,500 Packing Department Whole milk 220 1,540 Skim milk 230 950 Cream 220 1,010 670 3,500 Total 2,270 6,000 The management of Spotted Cow Dairy Company now plans to use the multiple production department factory overhead rate method. The total factory overhead associated with each department is as follows: Blending Department $224,000 Packing Department 171,500 Total $395,500 Required: If required, round all amounts to the nearest dollar. 1. Determine the multiple production department factory overhead rates, using direct labor hours for the Blending Department and machine hours for the Packing Department. Blending Department $ per direct labor hour Packing Department $ per machine hour 2. Determine the product factory overhead costs, using the multiple production department rates in (1). Whole milk Skim milk Cream Blending Department factory overhead $ $ $ Packing Department factory overhead Total factory overhead $ $ $
Explanation / Answer
1. Determine the multiple production department factory overhead rates, using direct labor hours for the Blending Department and machine hours for the Packing Department.
Blending department rates = 224000/1600 = 140 per labour hour
Packing department rate = 171500/3500 = 49 per machine hour
2. Determine the product factory overhead costs, using the multiple production department rates
Blending department overhead cost Packing Department factory overhead Total factory overhead Whole milk 105000 75460 180460 Skim Milk 67200 46550 113750 Cream 51800 49490 101290 Total 224000 171500 395500Related Questions
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