4.3 Multiple Production Department Factory Overhead Rate Method

Handy Leather, 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. Handy Leather 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 $102,600

Cut and Sew Department overhead 172,800

Total $275,400

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

Pattern Department 1,900 direct labor hours

Cut and Sew Department 2,400

Total 4,300 direct labor hours

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:

Total Multiple Production Department Factory Overhead Rate Method Handy Leather, 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. Handy Leather 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 $102,600 Cut and Sew Department overhead 172,800 Total $275,400 The direct labor estimated for each production department was as follows: Pattern Department 1,900 direct labor hours Cut and Sew Department 2,400 4,300 direct labor hours 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 0.08 0.10 0.12 Direct labor hours per unit 0.12 0.15 0.18 If required, round all per unit answers to the nearest cent. a. Determine the two production department factory overhead rates. Pattern Department per din Cut and Sew Department pero 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