Question

Multiple Production Department Factory Overhead Rate Method

Four Finger Appliance Company manufactures small kitchen appliances. The product line consists of blenders and toaster ovens. Four Finger Appliance presently uses the multiple production department factory overhead rate method. The factory overhead is as follows:

Assembly Department		$896,000
Test and Pack Department		608,000
	Total	$1,504,000

The direct labor information for the production of 5,700 units of each product is as follows:

	Assembly Department					Test and Pack Department
Blender				4,000	dlh				12,000	dlh
Toaster oven				12,000					4,000
Total				16,000	dlh				16,000	dlh

Four Finger Appliance used direct labor hours to allocate production department factory overhead to products.

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

a. Determine the two production department factory overhead rates.

Assembly Department	$ per direct labor hour
Test and Pack Department	$ per direct labor hour

b. Determine the total factory overhead and the factory overhead per unit allocated to each product.

Product	Total Factory Overhead	Factory Overhead Per Unit
Blender	$	$
Toaster Oven	$	$

Answer 1

a.

	Overhead	Labor hours	Overhead rate
Assembly Department	$       8,96,000	16000	$          56
Test and Pack Department	$       6,08,000	16000	$          38

b.

Product	Assembly Department	Test and Pack Department	Factory Overhead	Factory Overhead per unit
Blender	$       2,24,000	$           4,56,000	$         6,80,000	$          119.30
Toaster Oven	$       6,72,000	$           1,52,000	$         8,24,000	$          144.56