Spotted Cow Dairy Company manufactures three productswhole milk, skim milk, and creamin two production departments, Blending and
Question:
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 $299,700.
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 | 260 | 650 | |||||
Skim milk | 245 | 710 | |||||
Cream | 215 | 260 | |||||
720 | 1,620 | ||||||
Packing Department | |||||||
Whole milk | 470 | 500 | |||||
Skim milk | 300 | 415 | |||||
Cream | 130 | 165 | |||||
900 | 1,080 | ||||||
Total | 1,620 | 2,700 |
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:
Blending Department | $178,200 |
Packing Department | 121,500 |
Total | $299,700 |
Required:
1. Determine the multiple production department factory overhead rates, using machine hours for the Blending Department and direct labor hours for the Packing Department.
Blending Department | $ per machine hour |
Packing Department | $ per direct labor 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 | $ | $ |
Financial and Managerial Accounting
ISBN: 978-1285078571
12th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac