Question

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

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 \$352,800.

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 360 950 Skim milk 390 860 Cream 310 350 1,060 2,160 Packing Department Whole milk 480 550 Skim milk 760 680 Cream 220 210 1,460 1,440 Total 2,520 3,600

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 \$ \$ \$

 a. Direct labor overhead rate \$ 140 per direct labor hour b. Machine hour overhead rate \$   98 per machine hour

Calculations:

 a. Direct labor overhead rate =352800/2520 per direct labor hour b. Machine hour overhead rate =352800/3600 per machine hour

 Whole Milk Skim Milk Cream Direct labor hours \$   117,600 \$ 161,000 \$ 74,200 Machine hours \$   147,000 \$ 150,920 \$ 54,880

Calculations:

 Whole Milk Skim Milk Cream Direct labor hours =140*(360+480) =140*(390+760) =140*(310+220) Machine hours =98*(950+550) =98*(860+680) =98*(350+210)

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