Question

# Multiple Production Department Factory Overhead Rate Method Handy Leather, Inc., produces three sizes of sports gloves:...

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 \$112,100 Cut and Sew Department overhead 187,200 Total \$299,300

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

 Pattern Department 1,900 direct labor hours Cut and Sew Department 2,400 Total 4,300 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 0.04 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 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.

 Small glove \$ per unit Medium glove \$ per unit Large glove \$ per unit

 predetermined overhead rate=estimated oh/estimated DLH's pattern Cut&Sew department Department overhead 112,100 187,200 Direct labor hours 1,900 2,400 predetermined overhead rate 59 78 a) Pattern Department 59 per DLH Cut and Sew Department 78 per DLH b) Small glove 7.82 per unit Medium glove 9.97 per unit Large glove 12.12 per unit small medium large pattern 2.36 2.95 3.54 cut&sew 5.46 7.02 8.58 total 7.82 9.97 12.12 (overhead rate *direct labor hrs per unit ) ( example for small it will be pattern overhead rate*dlh per unit+ cut & sew oh rate*DLH per unit)