Reference no: EM132482360

Multiple Production Department Factory Overhead Rates

Point 1: 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 $299,700.

The three products consume both machine hours and direct labor hours in the two production departments as follows:

                                                 Direct Labor Hours      Machine Hours

Blending Department Whole milk             260                                650

Skim milk                                             245                               710

Cream                                             215                                       260  

                                                         720                                    1,620

Packing Department Whole milk               470                                     500

Skim milk                                           300                                        415

Cream                                             130                                           165

                                                        900                                          1,080

Total                                           1,620                                                 2,700

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:

Blending Department            $178,200

Packing Department               121,500

Total                                 $299,700

Required:

Question 1. Determine the multiple production department factory overhead rates, using machine hours for the Blending Department and direct labor hours for the Packing Department.