Question

1. 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:

   Pattern Department overhead		$134,900
   Cut and Sew Department overhead		225,600
   	Total	$360,500

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

   Pattern Department		1,900	direct labor hours
   Cut and Sew Department		2,400
   	Total	4,300	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	0.04		0.05		0.06
   Cut and Sew Department	0.07		0.09		0.11
   Direct labor hours per unit	0.11		0.14		0.17

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

   a. Determine the two production department factory overhead rates.

   Pattern Department	$per dlh
   Cut and Sew Department	$per dlh

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

   Small glove	$ per unit
   Medium glove	$ per unit
   Large glove	$ per unit

Answer 1

Answer:

a)Determination of Two production Department Overhead Rates

Pattern Department overhead Rate = Production Department overhead/Direct Labor Hours

=$134,900/1,900

=$71 per Direct Labor Hour.

Cut and sew Department overhead rate = Production Department overhead/Direct Labor Hours

= $225,600/2,400

=$94 per Direct labor Hour.

b)Determination of two production Departmnet factory overhead rates to determine the factory overhead per unit for each product

Small glove = (Direct labor hour per unit * Direct labor hour rate for pattern department) + (Direct labor hour per unit * Direct labor hour rate for cut and see department )

= (0.04*$71) + (0.07*$94)

= $2.84 +$6.58

= $9.42 per unit.

Medium Glove = (Direct labor hour per unit * Direct labor hour rate for pattern department) + (Direct labor hour per unit * Direct labor hour rate for cut and see department )

= (0.05* $71) + (0.09 * $94)

= $3.55 + $8.46

= $12.01 per unit

Large Glove = (Direct labor hour per unit * Direct labor hour rate for pattern department) + (Direct labor hour per unit * Direct labor hour rate for cut and see department )

= (0.06* $71) + (0.11* $94)

=$4.26 + $10.34

= $14.60 per unit.