Question

Four Finger Appliance Company manufactures small kitchen appliances. The product line consists of blenders and toaster ovens. Four Finger Appliance presently uses the multiple production department factory overhead rate method. The factory overhead is as follows:

1	Assembly Department	$186,000.00
2	Test and Pack Department	120,000.00
3	Total	$306,000.00

The direct labor information for the production of 7,500 units of each product is as follows:

	Department
	Assembly	Test and Pack
Blender	750 dlh	2,250 dlh
Toaster oven	2,250	750
Total	3,000 dlh	3,000 dlh

Four Finger Appliance used direct labor hours to allocate production department factory overhead to products.

Required:

Complete the Multiple-Department Overhead Tables for blenders and toaster ovens.

a.

Determine the two production department factory overhead rates.*

b.

Determine the total factory overhead and the factory overhead per unit allocated to each product.*

* If required, round all per-unit answers to the nearest cent.

Complete the Multiple-Department Overhead Table for blenders.

a.

Determine the two production department factory overhead rates. Enter these rates in the Activity Rate column.*

b.

Determine the total factory overhead and the factory overhead per unit allocated to blenders product.*

* If required, round all per-unit answers to the nearest cent.

	Blenders
Activity	Allocation-
	Base		Activity		Activity
	Usage	X	Rate	=	Cost
Assembly Department	dlh		/dlh
Test and Pack Department	dlh		/dlh
Total
Units
Factory overhead cost per unit

Complete the Multiple-Department Overhead Table for toaster ovens.

a.

Determine the two production department factory overhead rates. Enter these rates in the Activity Rate column.*

b.

Determine the total factory overhead and the factory overhead per unit allocated to toaster ovens product.*

* If required, round all per-unit answers to the nearest cent.

	Toaster Ovens
Activity	Allocation-
	Base		Activity		Activity
	Usage	X	Rate	=	Cost
Assembly Department	dlh		/dlh
Test and Pack Department	dlh		/dlh
Total
Units
Factory overhead cost per unit

Answer 1

Req A: Pre determined overhead rate for department:

Pre-determined overhead rate: Estimated overheads / Estimated labour hours

Assembly: $ 186000 /3040 DLH = $61.18per DLH

Test and pack department: $ 120000/3000 DLH = $40 per DLH

Req B:
BLENDER
ACTIVITY	ALLOCATION
	BASE USAGE		ACTIVITY RATE		ACTIVITY COST
Assembly	750	DLHs	$61.18	per DLH	$45,885.00
Test and Pack department	2250	DLHs	$40.00	per DLH	$90,000.00
		Total cost			$135,885.00
		Number of units			7500
		Cost per unit			18.118

TOASTER OVEN
ACTIVITY	ALLOCATION
	BASE USAGE		ACTIVITY RATE		ACTIVITY COST
Assembly	2250	DLHs	$61.18	per DLH	$137,655.00
Test and Pack department	750	DLHs	$40.00	per DLH	$30,000.00
		Total cost			$167,655.00
		Number of units			7500
		Cost per unit			22.354