Multiple Production Department Factory Overhead Rates California Chrome Company
ID: 2587779 • Letter: M
Question
Multiple Production Department Factory Overhead Rates
California Chrome Company manufactures three chrome-plated products—automobile bumpers, valve covers, and wheels. These products are manufactured in two production departments (Stamping and Plating). The factory overhead for California Chrome is $561,600.
The three products consume both machine hours and direct labor hours in the two production departments as follows:
The management of California Chrome 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 Stamping Department and machine hours for the Plating Department.
2. Determine the product factory overhead costs, using the multiple production department rates in (1).
Direct Labor Hours Machine Hours Stamping Department Automobile bumpers 850 1,150 Valve covers 540 930 Wheels 410 730 1,800 2,810 Plating Department Automobile bumpers 250 1,670 Valve covers 260 1,030 Wheels 245 1,100 755 3,800 Total 2,555 6,610Explanation / Answer
1) Stamping Department = 288000/1800 = $ 160.00 per direct labor hour Plating Department = 273600/3800 = $72.00 per machine hourr 2) Automobile Bumpers Valve Covers Wheels Stamping Department factory overhead 136000 86400 65600 Plating Department factory overhead 120240 74160 79200 Total factory overhead 256240 160560 144800
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