Multiple production department factory overhead rate method

Spielman 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. Spielman Leather uses the multiple production department factory overhead rate method of allocating factory overhead costs. Its factory overhead costs were budgeted as follows:

Line Item Description	Amount
Pattern Department overhead	$122,400
Cut and Sew Department overhead	204,000
Total	$326,400

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

Line Item Description	Amount
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

This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the question below.

Open spreadsheet

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

a. Determine the two production department factory overhead rates. Pattern department fill in the blank 1 of 2$ per dlh Cut and Sew department fill in the blank 2 of 2$ per dlh

b. Use the two production department factory overhead rates to determine the factory overhead per unit for each product.

Product	Amount
Small glove	fill in the blank 1 of 3$ per unit
Medium glove	fill in the blank 2 of 3$ per unit
Large glove	fill in the blank 3 of 3$ per unit

Part 2

Activity rates and product costs using activity-based cost

Idris Inc. manufactures entry and dining room lighting fixtures. Five activities are used in manufacturing the fixtures. These activities and their associated budgeted activity costs and activity bases are as follows:

Activity	Budgeted Activity Cost	Activity Base
Casting	$312,170	Machine hours
Assembly	172,200	Direct labor hours
Inspecting	23,040	Number of inspections
Setup	54,000	Number of setups
Materials handling	43,160	Number of loads

Corporate records were obtained to estimate the amount of activity to be used by the two products. The estimated activity-base usage quantities and units produced follow:

Activity Base	Entry	Dining	Total
Machine hours	5,340	4,730	10,070
Direct labor hours	4,590	6,890	11,480
Number of inspections	1,460	460	1,920
Number of setups	290	70	360
Number of loads	660	170	830
Units produced	10,600	5,300	15,900

This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.

Open spreadsheet

a. Determine the activity rate for each activity. If required, round the rate to the nearest dollar.

Activity	Activity Rate
Casting	$fill in the blank 2 per machine hour
Assembly	$fill in the blank 3 per direct labor hour
Inspecting	$fill in the blank 4 per inspection
Setup	$fill in the blank 5 per setup
Materials handling	$fill in the blank 6 per load

b. Use the activity rates in (a) to determine the total and per-unit activity costs associated with each product. Round the per unit amounts to the nearest cent.

Product	Total Activity Cost	Activity Cost Per Unit
Entry Lighting Fixtures	$fill in the blank 7	$fill in the blank 8
Dining Room Lighting Fixtures	$fill in the blank 9	$fill in the blank 10