Multiple Production Department Factory Overhead Rate Method Performance Gloves,
ID: 2394734 • Letter: M
Question
Multiple Production Department Factory Overhead Rate Method Performance Gloves, Inc. produces three sizes of sports gloves: small, medium, and large. A glove pattern is first stenciled onto leather In the Performance Gloves uses the multiple production department factory overhead rate method of allocating factory overhead costs. Its factory The stenciled patterns are then sent to the Cut and Sew Department, where the glove is cut and sewed together. overhead costs were budgeted as follows: Pattern Department overhead Cut and Sew Department overhead $216,000 960,000 $1,176,000 Total The direct labor estimated for each production department was as follows: Pattern Department 36,000 direct labor hours 60,000 96,000 direct labor hours
Explanation / Answer
Solution a:
Pattern Dept. factory overhead rate = Pattern department overhead/ Estimated Direct labor hours for Pattern dept.
= $216,000 / 36000 = $6 per direct labor hour
Cut And Sew Dept. Overhead rate = Cut and Sew department overhead/ Estimated Direct labor hours for Cut and Sew dept.
= $960,000 / 60000 = $16 per direct labor hour
Solution b:
Factory Overhead Per unit for each Product = Direct Labor hour per unit for each department * Overhead rate for that department.
Small Glove per unit factory Overhead = $6*0.20 + $16*0.50 = $9.20
Medium Glove per unit factory Overhead = $6*0.24 + $16*0.60 = $11.04
Large Glove per unit factory Overhead = $6*0.30 + $16*0.72 = $13.32
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