Hand Armour, Inc. produces three types of high performance sports gloves: small,
ID: 2425897 • Letter: H
Question
Hand Armour, Inc. produces three types of high performance sports gloves: small, medium, and large. A glove pattern is first stenciled onto leather in the Pattern Department. The stenciled patterns are then sent to the Cut and Sew Department, where the glove is cut and sewed together. Hand Armour, Inc. uses the multiple production department factory overhead rate method of allocating factory overhead costs. Its factory overhead costs were budgeted as follows:
1
Pattern Department overhead
$325,950.00
2
Cut and Sew Department overhead
416,650.00
3
Total
$742,600.00
The direct labor estimated for each production department was as follows:
Direct labor hours (dlh) are used to allocate the production department overhead to the products. The direct labor hours per unit for each product for each production department were obtained from the engineering records as follows:
1
Pattern Department overhead
$325,950.00
2
Cut and Sew Department overhead
416,650.00
3
Total
$742,600.00
Explanation / Answer
a) Overhead assinged per hour for Pattern Department = 325950/3075 $ 106.00 Overhead assigned per hour for Cut and Sew Department = 416650 / 3205 $ 130.00 b) Production Departments Small Glove Medium Glove Large Glove Pattern Department 0.09 0.1 0.16 Cut and Sew Department 0.12 0.14 0.15 Direct labor hours per unit 0.21 0.24 0.31 Pattern department = 106 x hours spent $ 9.54 $ 10.60 $ 16.96 Cut and Sew Department = 130 x hours spent $ 15.60 $ 18.20 $ 19.50 total Direct labor per unit $ 25.14 $ 28.80 $ 36.46
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