Question

Multiple Production Department Factory Overhead Rates

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
Stamping Department
Automobile bumpers			590			810
Valve covers			310			570
Wheels			350			620
			1,250			2,000
Plating Department
Automobile bumpers			195			1,150
Valve covers			200			700
Wheels			195			750
			590			2,600
	Total		1,840			4,600

The management of Gwinnett County Chrome Company now plans to use the multiple production department factory overhead rate method. The total factory overhead associated with each department is as follows:

Stamping Department	$120,000
Plating Department	104,000
Total	$224,000

Required:

1. Determine the multiple production department factory overhead rates, using direct labor hours for the Stamping Department and machine hours for the Plating Department.

Stamping Department	$ per direct labor hour
Plating Department	$ per machine hour

2. Determine the product factory overhead costs, using the multiple production department rates in (1).

	Automobile bumpers		Valve covers		Wheels
Stamping Department	$		$		$
Plating Department
Total factory overhead	$		$		$

Answer 1

A B с D 1 1) 2 Stamping Department $ 96 per direct labor hour 3 Plating Department $ 40 per machine hour 4 5 2) Automobile Valve Wheels 6 Bumpers Covers 7 Stamping Department $ 56,640 $ 29,760 $ 33,600 8 Plating Department $ 46,000$ 28,000 $30,000 9 Total factory overhead $ 102,640 $ 57,760 $ 63,600

A B с D 1 1) 2 Stamping Department =120000/1250 per direct labor hour 3 Plating Department =104000/2600 per machine hour 4 5 2) Automobile Valve Covers Wheels 6 Bumpers 7 Stamping Department =+B2*590 =+B2*310 * =+B2*350 8 Plating Department =+B3*1150 =+B3*700 =+B3*750 9 Total factory overhead =+B7+B8 =+C7+C8 =+D7+D8