Question

(#18-8) Multiple Production Department Factory Overhead Rate Method

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:

Assembly Department		$147,000
Test and Pack Department		99,000
	Total	$246,000

The direct labor information for the production of 5,900 units of each product is as follows:

	Assembly Department					Test and Pack Department
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.

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

a. Determine the two production department factory overhead rates.

Assembly Department	$ per direct labor hour
Test and Pack Department	$ per direct labor hour

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

Product	Total Factory Overhead	Factory Overhead Per Unit
Blender	$	$
Toaster Oven	$	$

Answer 1

Solution a:

Computation of Departmental factory Overhead Rate
Department	Factory Overhead	Total Direct Labor Hours	Overhead rate
Assebly Department	$1,47,000	3000	$49.00
Test and Pack Department	$99,000	3000	$33.00
Total	$2,46,000

Solution b:

Department	Overhead rate	Blender		Toaster Oven
		Labor Hours	Overhaed allcated	Labor Hours	Overhaed allcated
Assebly Department	$49.00	750	$36,750.00	2250	$1,10,250.00
Test and Pack Department	$33.00	2250	$74,250.00	750	$24,750.00
Total factory Overhead			$1,11,000.00		$1,35,000.00
Production units			5900		5900
Factory Overhead per unit			$18.81		$22.88