Question

Orange 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 Orange County Chrome is $233,300.

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	563	805
Valve covers	303	556
Wheels	340	596
	1,206	1,957
Plating Department
Automobile bumpers	174	1,168
Valve covers	177	713
Wheels	172	756
	523	2,637
Total	1,729	4,594

	Required:
1.	Determine the single plantwide factory overhead rate, using each of the following allocation bases: (a) direct labor hours and (b) machine hours. Round your answers to two decimal places.
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. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Round your answers to the nearest dollar amount.

Answer 1

1)
a) Based on direct labor hours:
Total direct labor hours = 1206 + 523 =1,729
Plantwide factory overhead rate = Total overhead/Total direct labor hours
Plantwide factory overhead rate = $233,300/1,729
Plantwide factory overhead rate = $134.93
b) Based on machine hours:
Total machine hours = 1,957 + 2,637 = 4,594
Plantwide factory overhead rate = Total overhead/Total machine hours
Plantwide factory overhead rate = $233,300/4,594
Plantwide factory overhead rate = $50.78
2)
(a) Product factory overhead costs using direct labor hour plantwide overhead rate:
Product	Automobile bumpers	Valve covers	Wheels
Stamping Department	563	303	340
Plating Department	174	177	172
Total Direct labour hours (A)	737	480	512
Overhead Rate (B)	134.93	134.93	134.93
Total product Factory overhead Costs (A*B)	$        99,446	$64,768	$69,086
(b) Product factory overhead costs using machine hour plantwide overhead rate:
Product	Automobile bumpers	Valve covers	Wheels
Stamping Department	805	556	596
Plating Department	1168	713	756
Total machine hours (A)	1973	1269	1352
Overhead Rate (B)	50.78	50.78	50.78
Total product Factory overhead Costs   (A*B)	$    1,00,196	$64,444	$68,659