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

Homework Answers

Answer #1
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)
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