Reference no: EM133065781

Question - Handy Leather, Inc., produces three sizes of sports gloves: small, medium, and large. A glove pattern is first stenciled onto leather in the Pattern Department. The stenciled patterns are then sent to the Cut and Sew Department, where the glove is cut and sewed together. Handy Leather uses the multiple production department factory overhead rate method of allocating factory overhead costs. Its factory overhead costs were budgeted as follows:

Pattern Department overhead	$152,500
Cut and Sew Department overhead	251,100
Total	$403,600

The direct labor estimated for each production department was as follows:

Pattern Department	2,500 direct labor hours
Cut and Sew Department	3,100
Total	5,600 direct labor hours

Direct labor hours are used to allocate the production department overhead to the products. The direct labor hours per unit for each product for each production department were obtained from the engineering records as follows:

Production Departments	Small Glove	Medium Glove	Large Glove
Pattern Department	0.05	0.06	0.07
Cut and Sew Department	0.07	0.09	0.11
Direct labor hours per unit	0.12	0.15	0.18

If required, round all per unit answers to the nearest cent.

Required -

a. Determine the two production department factory overhead rates.

b. Use the two production department factory overhead rates to determine the factory overhead per unit for each product.