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 $96,000 Cut and Sew Department overhead 160,000 Total $256,000 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 If required, round all per unit answers to the nearest cent. a. Determine the two production department factory overhead rates. Pattern Department per dih Cut and Sew Department per dih b. Use the two production department factory overhead rates to determine the factory overhead per unit for each product. Small glove per unit Medium glove %24 per unit Large glove 24 per unit
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 $96,000 Cut and Sew Department overhead 160,000 Total $256,000 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 If required, round all per unit answers to the nearest cent. a. Determine the two production department factory overhead rates. Pattern Department per dih Cut and Sew Department per dih b. Use the two production department factory overhead rates to determine the factory overhead per unit for each product. Small glove per unit Medium glove %24 per unit Large glove 24 per unit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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
$96,000
Cut and Sew Department overhead
160,000
Total
$256,000
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
If required, round all per unit answers to the nearest
cent.
a. Determine the two production department factory
overhead rates.
Pattern Department
per dih
Cut and Sew Department
per dih
b. Use the two production department factory overhead
rates to determine the factory overhead per unit for each
product.
Small glove
per unit
Medium glove
%24
per unit
Large glove
24
per unit
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