Multiple Production Department Factory Overhead Rate Method

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$83,200 Cut and Sew Department overhead138,000  Total$221,200

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

Pattern Department1,600direct labor hoursCut and Sew Department2,000  Total3,600direct 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 DepartmentsSmall GloveMedium GloveLarge GlovePattern Department0.04 0.05 0.06 Cut and Sew Department0.08 0.10 0.12 Direct labor hours per unit0.12 0.15 0.18

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

a. Determine the two production department factory overhead rates.

Pattern Department$per dlhCut and Sew Department$per dlh

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

Small glove$ per unitMedium glove$ per unitLarge glove$ per unit