eBook Calculator Print Item Multiple Production Department Factory Overhead Rate
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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 $528,400.
The three products consume both machine hours and direct labor hours in the two production departments as follows:
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:
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.
2. Determine the product factory overhead costs, using the multiple production department rates in (1).
Direct Labor Hours Machine Hours Blending Department Whole milk 850 1,150 Skim milk 540 930 Cream 410 730 1,800 2,810 Packing Department Whole milk 250 1,670 Skim milk 260 1,030 Cream 245 1,100 755 3,800 Total 2,555 6,610Explanation / Answer
Req 1: STATEMENT SHOWING OH RATE OF EACH DEPARTMENT MEASURES Total Expected OH DEPARTMENT Overheads Activity Rate BLENDING DLH 270,000 1,800 150 PER DLH PACKING MH 258,400 3,800 68 PER MH OH rate: Blending $150 per DLH Packing $ 68 per MH Req 2: WHOLE MILK SKIM MILK CREAM DLH of Blendidng 850 540 410 MH of Packing 1670 1030 1100 OH assigned: Blending deptt @$150 per DLH 127500 81000 61500 Packing deptt @$68 per MH 113560 70040 74800 Total OH assigned 241060 151040 136300
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