Question
SuperDry manufactures and sells T-shirts for all kinds of events. The company has two manufacturing operations - shirt-making and printing. When the company receives an
SuperDry manufactures and sells T-shirts for all kinds of events. The company has two
manufacturing operations - shirt-making and printing. When the company receives an order, the shirtmaking
department obtains the materials requested and has the fabric cut and sewn to sizes. The
ready T-shirts are then sent to the printing department where the customer labels or designs are
prepared and printed onto the surface with hot press machines.
SuperDry has three support departments - Building Maintenance, Human Resources and
Designs & Patterns. For the 1st quarter of 201X, the direct/direct overhead costs incurred by each
department are as follows (direct costs for S1 - S3; direct overhead costs for P1, P2 and R):
Shirt-making (P1) $260,000 Building Maintenance (S1) $65,000
Printing (P2) $170,000 Human Resources (S2) $40,000
Sales (R) $ 84,000 Designs & Patterns (S3) $38,000
The cost drivers identified for costs incurred by S1, S2 and S3 are number of square footage,
number of employees and number of designs respectively.
The following table summarises the usage of cost drivers by each department:
S1 S2 S3 P1 P2 R
Number of Designs - - - 16 30 8
Number of Employees 4 2 6 20 12 12
Square Feet 5,000 10000 10,000 15,000 25,000 5,000
(i) Assume P1 requires 10,000 direct labour hours (DLH) and 2,000 machine hours (MH) for
shirt-making operations, and P2 requires 1,000 DLH and 6,000 MH for printing operations.
Compute the departmental factory overhead rates for P1 and P2 using the appropriate
cost drivers. Enter answers in the shaded cell in the table provided. Round answers to 4
decimal places.
(ii) Assume the same information as in (b) above, compute the plant wide overhead rates
based on DLH and MH respectively. Enter answers in the shaded cell in the table provided.
Round answers to 4 decimal places.
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