Multiple Production Department Factory Overhead Rates Spotted Cow Dairy Company
ID: 2515177 • Letter: M
Question
Multiple Production Department Factory Overhead Rates
Spotted Cow Dairy Company manufactures three products—whole milk, skim milk, and cream—in two production departments, Blending and Packing. The factory overhead for Spotted Cow Dairy is $530,200.
The three products consume both machine hours and direct labor hours in the two production departments as follows:
The management of Spotted Cow Dairy Company now plans to use the multiple production department factory overhead rate method. The total factory overhead associated with each department is as follows:
Required:
If required, round all amounts to the nearest dollar.
1. Determine the multiple production department factory overhead rates, using direct labor hours for the Blending Department and machine hours for the Packing Department.
2. Determine the product factory overhead costs, using the multiple production department rates in (1).
Direct Labor Hours Machine Hours Blending Department Whole milk 850 1,150 Skim milk 540 930 Cream 410 730 1,800 2,810 Packing Department Whole milk 250 1,670 Skim milk 260 1,030 Cream 245 1,100 755 3,800 Total 2,555 6,610Explanation / Answer
1
BLENDING DEPT
$306000/ 1800 DIRECT LABOUR HOURS = $170
PACKING DEPT
$224200/ 3800 MACHINE HOURS = $59
2.
Whole milk
Skim milk
Cream
Blending Department factory overhead
$144500
$ 91800
$ 69700
Packing Department factory overhead
98530
60770
64900
Total factory overhead
$243030
$ 152570
$ 134600
THEREFORE TOTAL 530200
Whole milk
Skim milk
Cream
Blending Department factory overhead
$144500
$ 91800
$ 69700
Packing Department factory overhead
98530
60770
64900
Total factory overhead
$243030
$ 152570
$ 134600
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