Multiple Production Department Factory Overhead Rate Method Performance Gloves, 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. Performance Gloves 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 $139,200 Cut and Sew Department overhead 231,000 Total $370,200 The direct labor estimated for each production department was as follows: Pattern Department 2,400 direct labor hours Cut and Sew Department 3,000 Total 5,400 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 0.05 0.06 0.07 Cut and Sew Department 0.08 0.10 0.12 Direct labor hours per unit 0.13 0.16 0.19 If required, round all per unit answers to the nearest cent. Pattern Department 2,400 direct labor hours Cut and Sew Department 3,000 Total 5,400 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 0.05 0.06 0.07 Cut and Sew Department 0.08 0.10 0.12 Direct labor hours per unit 0.13 0.16 0.19 If required, round all per unit answers to the nearest cent. a. Determine the two production department factory overhead rates. Pattern Department per din per din Cut and Sew Department 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 Single plantwide and Multiple production department factory overhead rate methods and product cost distortion Instructions Single Plantwide Method Instructions Pineapple Motor Company manufactures two types of specialty electric motors, a commercial motor and a residential motor, through two production departments, Assembly and Testing. Presently, the company uses a single plantwide factory overhead rate for allocating factory overhead to the two products. However, management is considering using the multiple production department factory overhead rate method. The following factory overhead was budgeted for Pineapple: Assembly Department Testing Department $360,000.00 900,000.00 $1,260,000.00 3 Total a. Determine the per-unit factory overhead allocated to the commercial and residential motors under the single plantwide factory overhead rate method, using direct machine hours as the allocation base. Commercial $ Residential $ per unit per unit b. Determine the per-unit factory overhead allocated to the commercial and residential motors under the multiple production department factory overhead rate method, using direct machine hours as the allocation base for each department. Commercial S Residential $ per unit per unit C. (1) Recommend to management a product costing approach, based on your analyses in (a) and (b). (2) Give a reason for your answer. (1) Management should continue to use the single plantwide overhead rate method. Management should change to the multiple production department factory overhead rate method. Management is indifferent, since either method yields the same result. (2) (2) In this case, the single plantwide method causes cost distortion, so the multiple production department method should be used In this case, the multiple production department method causes cost distortion, so the single plantwide method should be used In this case, the factory overhead rates for each product are the same under either method; therefore, the company should choose single plantwide method since it's easier to implement