Question

Mulbiple Production Department Factory Overhead Rates Spotted Cow Dairy Company manufectures three products-whole milk, skdm milk, and cream-in two production departments, Biending and Packing. The factory overhead for Spotted Cow Dairy is $340,100 The three products censume both machine hours and direct labor hours in the two preduction departments as follows Direct Labor Hours Machine Hours 610 390 300 1,300 830 Sim mik 530 2,030 Packing Department Whole mik 1,280 190 175 545 1,845 780 2,900 4,930 The management of Spotted Cow Dairy Company now plans to use the multiple production department factory overhead rate method. The total factory overhead associated with each department is as follows: Biending Department Packing Department $ 1 69,000 171,100

Answer 1

Formula sheet

A	B	C	D	E	F	G	H	I	J	K	L
2
3		Calculation of overhead rate for Blending department:
4		Allocation Base	Direct Labor Hours
5		Total Overhead for Blending Department	169000
6		Total direct labor hours for blending department	1300
7
8		Overhead Rate for Blending department	=Total Overhead for blending deaprtment / Total Direct Labor hours for Blending Department
9			=D5/D6	=D5/D6
10
11		Hence Overhead Rate for Blending department	=D9
12
13
14		Calculation of overhead rate for Packing department:
15		Allocation Base	Machine Hours
16		Total Overhead for Packing Department	171100
17		Total Machine hours for packing department	2900
18
19		Overhead Rate for Packing department	=Total Overhead for Packing deaprtment / Total Machine hours for Packing Department
20			=D16/D17	=D16/D17
21
22		Hence Overhead Rate for Packing department	=D20
23
24
25		Calculation of product factory overhead costs:
26			Whole Milk	Skim milk	Cream
27		Number of labor hours used in Blending Department	610	390	300
28		Overhead Rate for Blending Department	=$D$11	=$D$11	=$D$11
29		Blending Department factory overhead	=D27*D28	=E27*E28	=F27*F28
30
31			Whole Milk	Skim milk	Cream
32		Number of machine hours used in Packing Department	1280	780	840
33		Overhead Rate for Packing Department	=$D$22	=$D$22	=$D$22
34		Packing Department factory overhead	=D32*D33	=E32*E33	=F32*F33
35
36		Hence,
37			Whole Milk	Skim milk	Cream
38		Blending Department factory overhead	=D29	=E29	=F29
39		Packing Department factory overhead	=D34	=E34	=F34
40		Total factory Overhead	=D38+D39	=E38+E39	=F38+F39
41