Question
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.
- 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:
Department | Dollar Amount |
Pattern Department | $216,000 |
Cut and Sew Department | 960,000 |
Total Overhead | 1,176,000 |
The direct labor estimated for each production department was as follows:
Department | Direct Labor Hours |
Pattern Department | 36,000 |
Cut and Sew Department | 60,000 |
Total Direct Labor Hours | 96,000 |
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 | .30 | .35 | .40 |
Cut and Sew Department | .60 | .50 | .84 |
Total Direct Labor Hours per Unit | .90 | .85 | 1.24 |
- Determine the two production department factory overhead rates.
- Use the two production department factory overhead rates to determine the factory over-head per unit for each product.
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