CengageNOW Online teaching and learning resource from Cengage Learni Problem-Sol
ID: 2595649 • Letter: C
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CengageNOW Online teaching and learning resource from Cengage Learni Problem-Solving Strategy Mutiple Production Department Fattory Overhead Rates California Chrome Company manufactures three chrome-plated products-automobile tumpers, vaive covers, and wheels. These products are manufactured in two production departments (Scamping and Plating). The factory oerhead for Caifomia Chreme is $550,400 The three products consume both machine hours and direct labor hours in the two production departments as follows ct Labor Machine Hours Stamping Department Autamoble bumpers Valve covers 890 1,210 2.960 Plating Department Autamobie bumpers Valve covers ,940 1,190 1,270 4,400 7,360 2,700 The management of California Chrome Cempany now plans to use the ultiple preduction department factory everbead rate methed. The total fectory everhead associsted with each department is as folows Stamping Department Plating Department $304,000 246,400 550,400 Total If required, round all amounts to the nearest dolar 1. Determine the mutiple production department factory overhead rates, using direct labor hours for the Stamping Department and machine hours for the liating Department Stamping Department Pating Department 2. Deter-the product factory overhead coes, using tne multiple producton department rates n ) per direct labor hour per machine hour Automobile Bumpers Vaive Covers Wheels Stamping Department factory overhead Pinting Department fectory overhead Total factory overheadExplanation / Answer
California Chrome Company
Stamping Department
Plating Department
Direct labor hours
1,900
Machine hours
4,400
overhead cost
$304,000
$246,400
Overhead rate
$160 per direct labor hour
$56 per Machine hour
Automobile Bumpers
Valve Covers
Wheels
Total
Stamping Department Factory Overhead
$142,400
$91,200
$70,400
$304,000
Plating Department Factory Overhead
$108,640
$66,640
$71,120
$246,400
Total
$251,040
$157,840
$141,520
$550,400
Automobile Bumpers
Valve Covers
Wheels
Total
Stamping Department:
Direct labor hours
890
570
440
1,900
overhead rate
$160
$160
$160
$160
Overhead cost applied
$142,400
$91,200
$70,400
$304,000
Plating Department:
Machine hours
1,940
1,190
1,270
4,400
Overhead rate
56
$56
$56
$56
Overhead cost applied
$108,640
$66,640
$71,120
$246,400
The total overhead cost for Stamping Department is calculated as follows,
Overhead cost applied = overhead rate x direct labor hours
The total overhead cost for Plating Department is calculated as follows,
Overhead cost applied = overhead rate x machine hours
Stamping Department
Plating Department
Direct labor hours
1,900
Machine hours
4,400
overhead cost
$304,000
$246,400
Overhead rate
$160 per direct labor hour
$56 per Machine hour
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