Question

1. Xtreme 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. Xtreme 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		$172,800
Cut and Sew Department overhead		288,000
	Total	$460,800

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

Pattern Department		2,400	direct labor hours
Cut and Sew Department		3,000
	Total	5,400	direct labor hours

3. 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

4. If required, round all per unit answers to the nearest cent.
5. a. Determine the two-production department factory overhead rates.

Pattern Department	$___ per dlh
Cut and Sew Department	$___ per dlh

6. 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

Solution a:
Computation of overhead rate for Each department
Particulars	Pattern Department	Cut and Sew department
Budgeted Overhead costs	$1,72,800	$2,88,000
/Budgeted direct labor Hours	2400	$3,000
Departmental Overhead rate	$72.00	$96.00

Solution b:
Computation of Factory overhead per unit of Each product
	Small Glove	Medium Glove	Large Glove
Pattern Department:
Direct labor hours per unit	0.04	0.05	0.06
*Departmental Overhead rate	$72.00	$72.00	$72.00
Unit Factory Overhead (a)	$2.88	$3.60	$4.32
Cut and Sew Department:
Direct labor hours per unit	0.07	0.09	0.11
*Departmental Overhead rate	$96.00	$96.00	$96.00
Unit Factory Overhead (b)	$6.72	$8.64	$10.56
Factory overhead per unit of Each product (a+b)	9.6	12.24	14.88