lab 18 Multiple Production Department Factory Overhead Rates Spotted Cow Dairy C

Question

lab 18

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 $452,000.

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.

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 750 1,030 Skim milk 480 830 Cream 370 640 1,600 2,500 Packing Department Whole milk 220 1,540 Skim milk 230 950 Cream 220 1,010 670 3,500 Total 2,270 6,000

Explanation / Answer

1.

2.

Blending Department Factory overhead/total direct labour hours in blending department 160 (256,000/1,600) Packing Department Factory overhead/total machine hours in packing department 56 (196,000/3,500)

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