Question

Performance Gloves, 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. Performance Gloves 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		$216,000
Cut and Sew Department overhead		960,000
	Total	$1,176,000

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

Pattern Department		36,000	direct labor hours
Cut and Sew Department		60,000
	Total	96,000	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	0.20		0.24		0.30
Cut and Sew Department	0.50		0.60		0.72
Direct labor hours per unit	0.70		0.84		1.02

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

Answer 1

a. Determine the two production department factory overhead rates.

Department factory overhead rates= Budgeted factory overhead costs/Budgeted direct labor hours

Pattern Department= $216000/36000= $6 per dlh

Cut and Sew Department= $960000/60000= $16 per dlh

Pattern Department	$6 per dlh
Cut and Sew Department	$16 per dlh

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

Small glove= ($6*0.20+$16*0.50)= $9.20 per unit

Medium glove= ($6*0.24+$16*0.60)= $11.04 per unit

Large glove= ($6*0.30+$16*0.72)= $13.32 per unit

Small glove	$9.20 per unit
Medium glove	$11.04 per unit
Large glove	$13.32 per unit

NOTE:- Please rate the answer and for any problem regarding the answer please ask in the comment section.