Question
LT Company is a manufacturer of body and hand lotions. Each product is produced in a separate production department. Three support departments are involved in
LT Company is a manufacturer of body and hand lotions. Each product is produced in a separate production department. Three support departments are involved in providing support to the production department: utilities, general plant, and purchasing. The budgeted data for the five departments is as follows: Service Depatments Production Depatments Utilities General Plant Purchasing Body Lotion Hand Lotion Overhead Square feet Machine hours Purchase order Allocation base RM120,000 3,000 1,233 20 Machine hours RM540,000 1,000 1,403 40 Square feet RM220,000 3,000 1,345 7 Purchase order RM137,500 9,600 8,000 60 Machine Hours RM222,500 8,400 24,000 120 Machine Hours The production department's overhead rate is based on machine hours. Body lotion uses 3 machine hours per kilogram, while hand lotion uses 1.5 machine hours per kilogram. Required: a) Calculate the overhead cost per kilogram for each product using the overall factory overhead rate. b) Prepare an overhead allocation schedule to the production department using the direct method. c) Calculate the overhead cost per kilogram for each product by using the departmental rate allocated in b) above.
LT Company is a manufacturer of body and hand lotions. Each product is produced in a separate production department. Three support departments are involved in providing support to the production department: utilities, general plant, and purchasing. The budgeted data for the five departments is as follows: The production department's overhead rate is based on machine hours. Body lotion uses 3 machine hours per kilogram, while hand lotion uses 1.5 machine hours per kilogram. Required: a) Calculate the overhead cost per kilogram for each product using the overall factory overhead rate. b) Prepare an overhead allocation schedule to the production department using the direct method. c) Calculate the overhead cost per kilogram for each product by using the departmental rate allocated in b) aboveStep by Step Solution
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