Question

eBook Show Me How
Question Content Area
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 $112,700
Cut and Sew Department overhead 188,500
Total $301,200
The direct labor estimated for each production department was as follows:

Line Item Description Amount
Pattern Department 2,300 direct labor hours
Cut and Sew Department 2,900
Total 5,200 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 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

Answer 1

To solve the problem, we will follow the steps to calculate the production department factory overhead rates and then determine the factory overhead per unit for each product.

### Part a: Calculate the Production Department Factory Overhead Rates

1. **Calculate the overhead rate for Pattern Department.**

\[
\text{Pattern Department Overhead Rate} = \frac{\text{Total Pattern Department Overhead}}{\text{Total Direct Labor Hours for Pattern Department}}
\]
\[
\text{Pattern Department Overhead Rate} = \frac{112,700}{2,300} = 49.87 \, (\text{rounded to two decimal places})
\]
Therefore, the Pattern Department overhead rate is approximately **$49.87 per direct labor hour (dlh)**.

2. **Calculate the overhead rate for Cut and Sew Department.**

\[
\text{Cut and Sew Department Overhead Rate} = \frac{\text{Total Cut and Sew Department Overhead}}{\text{Total Direct Labor Hours for Cut and Sew Department}}
\]
\[
\text{Cut and Sew Department Overhead Rate} = \frac{188,500}{2,900} = 64.24 \, (\text{rounded to two decimal places})
\]
Therefore, the Cut and Sew Department overhead rate is approximately **$64.24 per direct labor hour (dlh)**.

### Answers for Part a:
- **Pattern Department**: **$49.87 per dlh**
- **Cut and Sew Department**: **$64.24 per dlh**

---

### Part b: Calculate the Factory Overhead per Unit for each Product

First, we need to determine how many direct labor hours are required for each product for both departments:

1. **Small Glove:**
\[
\text{Pattern Department dlh for Small Glove} = 0.05 \, \text{(hours per unit)}
\]
\[
\text{Cut and Sew Department dlh for Small Glove} = 0.08 \, \text{(hours per unit)}
\]
\[
\text{Total dlh for Small Glove} = 0.05 + 0.08 = 0.13 \, \text{hours per unit}
\]
\[
\text{Factory Overhead for Small Glove} = (0.05 \times 49.87) + (0.08 \times 64.24)
\]
\[
= (2.4935) + (5.1384) \approx 7.63
\]

2. **Medium Glove:**
\[
\text{Pattern Department dlh for Medium Glove} = 0.06 \, \text{(hours per unit)}
\]
\[
\text{Cut and Sew Department dlh for Medium Glove} = 0.10 \, \text{(hours per unit)}
\]
\[
\text{Total dlh for Medium Glove} = 0.06 + 0.10 = 0.16 \, \text{hours per unit}
\]
\[
\text{Factory Overhead for Medium Glove} = (0.06 \times 49.87) + (0.10 \times 64.24)
\]
\[
= (2.9922) + (6.424) \approx 9.42
\]

3. **Large Glove:**
\[
\text{Pattern Department dlh for Large Glove} = 0.07 \, \text{(hours per unit)}
\]
\[
\text{Cut and Sew Department dlh for Large Glove} = 0.12 \, \text{(hours per unit)}
\]
\[
\text{Total dlh for Large Glove} = 0.07 + 0.12 = 0.19 \, \text{hours per unit}
\]
\[
\text{Factory Overhead for Large Glove} = (0.07 \times 49.87) + (0.12 \times 64.24)
\]
\[
= (3.491) + (7.7088) \approx 11.20
\]

### Answers for Part b:
- **Small glove**: **$7.63 per unit**
- **Medium glove**: **$9.42 per unit**
- **Large glove**: **$11.20 per unit**