Question

Single Plantwide Factory Overhead Rate Gwinnett County Chrome Company manufactures three chrome-plated products-automobile bumpers, valve covers, and wheels. These products are manufactured in two production departments (Stamping and Plating). The factory overhead for Gwinnett County Chrome is $239,200. The three products consume both machine hours and direct labor hours in the two production departments as follows: Direct Labor Hours Machine Hours 810 Stamping Department Automobile bumpers Valve covers Wheels 570 590 310 350 1.250 620 2,000 1,150 Plating Department Automobile bumpers Valve covers Wheels 195 200 195 590 1,840 700 750 2,600 4,600 Total Required: 1. Determine the single plantwide factory overhead rate, using each of the following allocation bases: (a) direct labor hours and (b) machine hours. Direct labor hour overhead rate per direct labor hour Machine hour overhead rate per machine hour 2. Determine the product factory overhead costs, using (a) the direct labor hour plantwide factory overhead rate and (b) the machine hour plantwide factory overhead rate. Automobile Bumpers Valve Covers Wheels Direct labor hours Machine hours

Answer 1

Answer:

1.

Direct labor hour overhead rate = $130 Per direct labor hour

Machine hour overhead rate = $52 Per Machine hour

.

Calculation of Direct Labor and machine hour overhead rate

Direct labor hour overhead rate = Total Factory Overhead ÷ Total Budgeted Direct Labor hours

= $2,39,200 ÷ 1,840

= $130 Per Direct Labor Hour

Direct Machine hour overhead rate = Total Factory Overhead ÷ Total Budgeted Machine Labor hours

= $239,200 ÷ 4,600

= $52 Per Machine Hour

.

2.)

	Automobile Bumpers	Value Covers	Wheels
Direct Labor hours	$1,02,050	$66,300	$70,850
Machine Hours	$1,01,920	$66,040	$71,240

Workings:

Cost = Number of Hours × Cost per hour

	Automobile Bumpers	Value Covers	Wheels
Direct Labor hours	$130 × (590+195)	$130 ×(310+200)	$130 × (350+195)
Machine Hours	$52 × (810+1150)	$52 × (570+700)	$52 × (620+750)