1) determine the single overhead rate, using the following allocation bases: A)

Question

1) determine the single overhead rate, using the following allocation bases: A) direct labor hours and b) machine hours
XYZ Company manufactures three products-Swiss cheese, American Cheese, and Cottage Cheese-in two production departments, Blending and Packing. The factory overhead for XYZ is $299,700. The three products use both machine hours and direct labor hours in the two departments as follows: Direct Labor Hours Machine Hours Swiss American Cottage 260 245 215 720 650 710 260 1,620 Packing Swiss American Cottage 470 300 130 900 500 415 165 1,080 Total 1,620 2,700 Determine the single overhead rate, usinthe following allocation bases: (A) direct labor hours and (B) machine hours. Determine the product factory overhead costs, using (A) direct labor hour plantwide factory overhead rate and (B) the machine hour plantwide factory overhead rate

Explanation / Answer

(1) Single plant-wide Direct labor hour overhead rate = $299,700 / 1,620 = $185 per hour machine hour overhead rate = $299,700 / 2,700 = $111 per hour (2) Factory-wide overhead cost (i) Swiss Direct labor hour overhead cost = $299,700 x (260 + 470) / 1,620 = $135,050 Machine hours overhead cost = $299,700 x (650 + 500) / 2,700 = $127,650 (ii) American Direct labor hour overhead cost = $299,700 x (245 + 300) / 1,620 = $100,825 Machine hours overhead cost = $299,700 x (710 + 415) / 2,700 = $124,875 (iii) Cottage Direct labor hour overhead cost = $299,700 x (215 + 130) / 1,620 = $63,825 Machine hours overhead cost = $299,700 x (260 + 165) / 2,700 = $47,175

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