Question

1. Multiple Production Department Factory Overhead Rates

   Spotted Cow Dairy Company manufactures three products—whole milk, skim milk, and cream—in two production departments, Blending and Packing. The factory overhead for Spotted Cow Dairy is $380,300.

   The three products consume both machine hours and direct labor hours in the two production departments as follows:

   		Direct Labor Hours			Machine Hours
   Blending Department
   Whole milk			610			830
   Skim milk			390			670
   Cream			300			530
   			1,300			2,030
   Packing Department
   Whole milk			180			1,190
   Skim milk			190			730
   Cream			175			780
   			545			2,700
   	Total		1,845			4,730

   The management of Spotted Cow Dairy Company now plans to use the A method that allocates factory overhead to product by using factory overhead rates for each production department.multiple production department factory overhead rate method. The total factory overhead associated with each department is as follows:

   Blending Department	$221,000
   Packing Department	159,300
   Total	$380,300

   Required:

   If required, round all amounts to the nearest dollar.

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

   Blending Department	$ per direct labor hour
   Packing Department	$ per machine hour

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

   	Whole milk		Skim milk		Cream
   Blending Department factory overhead	$		$		$
   Packing Department factory overhead
   Total factory overhead	$		$		$

Answer 1

1
Blending Department	170	per direct labor hour	=221000/1300
Packing Department	59	per machine hour	=159300/2700
2
	Whole milk	Skim milk	Cream
Blending Department factory overhead	103700	66300	51000
Packing Department factory overhead	70210	43070	46020
Total factory overhead	173910	109370	97020
Workings:
	Whole milk	Skim milk	Cream
Blending Department factory overhead	=610*170	=390*170	=300*170
Packing Department factory overhead	=1190*59	=730*59	=780*59