Golden Glove Company produces three types of gloves: small, medium, and large. A

Question

Golden Glove Company produces three types of gloves: small, medium, and large. A glove pattern is the first stenciled onto leather in the Pattern Department. The stenciled patterns are then sent to the Cut and Sew Department, where the final glove is cut and sewed together. Golden uses the multiple production department factory overhead rate method of allocating factory overhead costs. Its factory overhead costs were budgeted as follows:

Pattern Department overhead $100,000
Cut and Sew Department overhead 350,000
Total $450,000

The direct labor estimated for each production department was as follows:
Pattern Department overhead 2,500
Cut and Sew Department overhead 5,000
Total 7,500 direct labor hours

Direct labor hours are used to allocate the production department overhead to the products. The direct labor hours per unit for each production department were obtained from the engineering records as follows:
Production Department     Small Glove       Medium Glove                  Large Glove
 Pattern Department             0.04                     0.05                             0.07

Cut and Sew Department       0.06                    0.09                              0.08

Direct Labor hours per unit    0.10                    0.14                              0.15

how to detemine the two production department factory overhead rates.

Explanation / Answer

Factory Overhead rate
Pattern department                      $100,000 / 2,500 = $40 per DLH

Cutting and Sew department       $350,000 / 5,000 = $70 per DLH

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