Reference no: EM133153008
Question - Multiple Production Department Factory Overhead Rate Method - 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 $124,000
Cut and Sew Department overhead 205,000
Total $329,000
The direct labor estimated for each production department was as follows:
Pattern Department 2,000 direct labor hours
Cut and Sew Department 2,500
Total 4,500 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
|
0.04
|
0.05
|
0.06
|
|
Cut and Sew Department
|
0.07
|
0.09
|
0.11
|
|
Direct labor hours per unit
|
0.11
|
0.14
|
0.17
|
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.