60.1K

Verified Solution

Link Copied!

Multiple production department factory overhead rate method

Spielman 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. Spielman Leather uses the multiple production department factory overhead rate method of allocating factory overhead costs. Its factory overhead costs were budgeted as follows:

Line Item Description	Amount
Pattern Department overhead	$151,200
Cut and Sew Department overhead	252,000
Total	$403,200

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

Line Item Description	Amount
Pattern Department	2,800 direct labor hours
Cut and Sew Department	3,500
Total	6,300 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

This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the question below.

Open spreadsheet

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

a. Determine the two production department factory overhead rates. Pattern department $ ____ per dlh Cut and Sew department $ _____ per dlh

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

Product	Amount
Small glove	$ _____ per unit
Medium glove	$ _____ per unit
Large glove	$ _____ per unit

Answer & Explanation Solved by verified expert

See Answer