Multiple Production Department Factory Overhead Rate Method Performance Gloves,

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 Pattern Department. The stenciled patterns are then sent to the Cut and Sew Department, where the glove is cut and sewed together. Performance Gloves 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 $115,900 194,400 $310,300 Cut and Sew Department overhead Total The direct labor estimated for each production department was as follows: Pattern Department Cut and Sew Department 1,900 direct labor hours 2,400 4,300 direct labor hours Total Direct labor hours 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: Production Departments Small Glove Medium Glove Large Glove Pattern Department Cut and Sew Department 0.04 0.07 0.11 0.05 0.09 0.14 0.06 0.11 0.17 Direct labor hours per unit If required, round all per unit answers to the nearest cent. a. Determine the two production department factory overhead rates. Pattern Department per dih $per dlh Cut and Sew Department b. Use the two production department factory overhead rates to determine the factory overhead per unit for each product. Small glove Medium glove Large glove per unit per unit per unit

Explanation / Answer

Req a. Pattern deptt Oh rate per DLH: Estimated overheads 115900 Divide: Estimated DLH 1900 OH rate per DLH 61 Cut n Sew deptt OH rate per DLH: Estimated Overheads 194400 Divide: Estimated DLH 2400 OH rate per DLH 81 Req b: Small Glove Medium Large DLH required per unit of Pattern 0.04 0.05 0.06 DLH required per unit of Cut & Sew 0.07 0.09 0.11 OH of Pattern @ 61 per DLH 2.44 3.05 3.66 PH of Cut & Sew @ 81 per DLH 5.67 7.29 8.91 OH cost per unit 8.11 10.34 12.57 Small Glove: 8.11 per unit Medium Glove: 10.34 per unit Large Glove: 12.57 per unit

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