Question

Single Plantwide Factory Overhead Rate Spotted Cow Dairy Company manufactures three products—whole milk, skim milk, and...

Single Plantwide Factory Overhead Rate

Spotted Cow Dairy Company manufactures three products—whole milk, skim milk, and cream—in two production departments, Blending and Packing. The factory overhead for Spotted Cow Dairy is $420,000.

The three products consume both machine hours and direct labor hours in the two production departments as follows:

Direct Labor Hours Machine Hours
Blending Department
Whole milk 300 940
Skim milk 330 850
Cream 250 340
880 2,130
Packing Department
Whole milk 400 520
Skim milk 630 640
Cream 190 210
1,220 1,370
Total 2,100 3,500

Required:

1. Determine the single plantwide factory overhead rate, using each of the following allocation bases: (a) direct labor hours and (b) machine hours. If required, round all amounts to the nearest dollar.

a. Direct labor overhead rate $ per direct labor hour
b. Machine hour overhead rate $ per machine hour

2. Determine the product factory overhead costs, using (a) the direct labor hour plantwide factory overhead rate and (b) the machine hour plantwide factory overhead rate.

Whole Milk Skim Milk Cream
Direct labor hours $ $ $
Machine hours $ $ $
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