chapter 18

manufactured in two production departments (Stamping and Plating). The factory overhead for Gwinnett County Chrome is $239,200. The three products consume both machine hours and direct labor hours in the two production departments as follows: Direct Labor Hours Machine Hours Stamping Department Automobile bumpers Valve covers 590 810 310 570 Wheels 350 620 1,250 2,000 Plating Department Automobile bumpers 195 Valve covers 1,150 700 200 Wheels 195 750 590 2,600 Total 1,840 4,600 Required: 1. Determine the single plantwide factory overhead rate, using each of the following allocation bases: (a) direct labor hours and (b) machine hours, Direct labor hour overhead rate per direct labor hour 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 fact overhead rate. Automobile Bumpers Valve Covers Wheels Direct labor hours Machine hours Multiple Production Department Factory Overhead Rates Gwinnett County Chrome Company manufactures three chrome-plated products-automobile bumpers, valve covers, and wheels. These products are manufactured in two production departments (Stamping and Plating). The factory overhead for Gwinnett County Chrome is $239,200 The three products consume both machine hours and direct labor hours in the two production departments as follows: Direct Labor Hours Machine Hours Stamping Department Automobile bumpers Valve covers 590 810 310 570 Wheels 350 620 195 200 700 1,250 2,000 Plating Department Automobile bumpers 1,150 Valve covers Wheels 195 750 590 2,600 Total 1,840 4,600 The management of Gwinnett County Chrome Company now plans to use the multiple production department factory overhead rate method. The total factory overhead associated with each department is as follows: $120,000 Stamping Department Plating Department 104,000 $224,000 Total Required: 1. Determine the multiple production department factory overhead rates, using direct labor hours for the Stamping Department and machine hours for the Check My Work Previous Next Wheels 350 620 1,250 2,000 195 1,150 Plating Department Automobile bumpers Valve covers Wheels 200 700 195 750 590 2,600 Total 1,840 4,600 The management of Gwinnett County Chrome Company now plans to use the multiple production department factory overhead rate method. The total factory overhead associated with each department is as follows: Stamping Department $120,000 Plating Department 104,000 $224,000 Total Required: 1. Determine the multiple production department factory overhead rates, using direct labor hours for the Stamping Department and machine hours for the Plating Department Stamping Department per direct labor hour Plating Department per machine hour 2. Determine the product factory overhead costs, using the multiple production department rates in (1) Automobile bumpers Valve covers Wheels Stamping Department Plating Department Total factory overhead Activity-Based And Department Rate Product Costing and Product Cost Distortions Black and Blue Sports Inc, manufactures two products: snowboards and skis. The factory overhead incurred is as follows: Indirect labor Cutting Department $507,000 156,000 Finishing Department 192,000 Total $855,000 The activity base associated with the two production departments is direct labor hours. The Indirect labor can be assigned to two different activities as follows: Budgeted Activity Cost Activity Production control Activity Base Number of production runs Number of moves $237,000 270,000 $507,000 Materials handling Total The activity-base usage quantities and units produced for the two products follow: Number of Production Runs Number of Moves Direct Labor Hours-Cutting Units Produced Snowboards 430 5,000 4,000 2,000 Direct Labor Hours- Finishing 2,000 4,000 6,000 6,000 6,000 Skis 70 2,500 Total 500 7,500 6,000 12,000 Required: 1. Determine the factory overhead rates under the multiple production department rate method. Assume that indirect labor is associated with the productie departments, so that the total factory overhead is $315,000 and $540,000 for the Cutting and Finishing departments, respectively. Round per unit amoun to the nearest whole cent. 1 eBook 1. Determine the factory overhead rates under the multiple production department rate method. Assume that indirect labor is associated with the production departments, so that the total factory overhead is $315,000 and $540,000 for the cutting and finishing departments, respectively. Round per unit amounts to the nearest whole cent, Department Production Department Rate Cutting Department per direct labor hour Finishing Department per direct labor hour 2. Determine the total and per unit factory overhead costs allocated to each product, using the multiple production department overhead rates in (1) Round per unit amounts to the nearest whole cent. Product Total Factory Overhead Factory Overhead Per Unit Snowboards Skis 3. Determine the activity rats, assuming that the indirect labor is associated with activities rather than with the production departments. Round per unit amounts to the nearest whole cent. Activity Activity Rate Production Control per prod. run Material Handling per move Cutting Department Finishing Department per din 4. Determine the total and per-unit cost assigned to each product under activity-based costing. Round the per unit amounts to the nearest whole cent. Product Total Activity Cost Activity Cost Per Unit Snowboards Skis 5. Comment on the difference in the per-unit overhead allocated to each product under the multiple production department factory overhead rate and activity-based costing methods The activity based overhead allocation reveals that consume more factory overhead on a per unit basis than do The method does not show this because all factory overhead is assumed to be proportional to direct labor hours. The method separately accounts for the production control and materials handling activity costs. Snowboards have more production control and materials handling activities than do skls. This is because snowboards are made in smallerlots, representing a wide variety of styles. Thus, snowboards have higher activity costs per unit than skis per din