Multiple Production Department Factory Overhead Rates Spotted Cow Dairy Company
ID: 2533944 • 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 $574,000.
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.
2. Determine the product factory overhead costs, using the multiple production department rates in (1).
Direct Labor Hours Machine Hours Blending Department Whole milk 710 960 Skim milk 450 770 Cream 340 610 1,500 2,340 Packing Department Whole milk 210 1,540 Skim milk 220 950 Cream 200 1,010 630 3,500 Total 2,130 5,840Explanation / Answer
Production department Factory overhead rates Blending department packing department Total Factory overhead 315000 259000 Direct labour hours 1500 630 departmental overhead rate $ 210/labour hour $ 411/labour hour Product factory overhead cost allocation Factory Overhead Whole milk Skim milk Cream Direct labour hours overhead rate Total Direct labour hours overhead rate Total Direct labour hours overhead rate Total Blending department 710 210/labour hour 149100 450 210/labour hour 94500 340 210/labour hour 71400 Packing Department 210 411/labour hour 86310 220 411/labour hour 90420 200 411/labour hour 82200 TOTAL 235410 184920 153600
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