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 $212,100.

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	560	798
Valve covers	301	557
Wheels	339	599
	1,200	1,954
Plating Department
Automobile bumpers	170	1,168
Valve covers	185	708
Wheels	173	762
	528	2,638
Total	1,728	4,592

	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.

Amount Descriptions

Amount Descriptions
Activity-base usage
Activity rate
Direct labor hours
Direct labor overhead rate
Direct materials
Machine hour overhead rate
Machine hours

Overhead Rates

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.

Direct labor overhead rate:	per direct labor hour
Machine hour overhead rate:	per machine hour

Product Factory Overhead Costs

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.

1		Automobile Bumpers	Valve Covers	Wheels
2
3

Answer 1

Solution

Orange County Chrome Company

1. Determination of the single plantwide factory overhead rate, using the following allocation bases:

1. Direct labor hours

Plantwide factory overhead rate = total overhead cost/total direct labor hours

Total overhead cost = $212,100

Total direct labor hours = 1,728 DLH

Plantwide factory overhead rate = $212,100/1,728 = $122.74 per DLH

1. Machine hours

Plantwide factory overhead rate = total overhead cost/total machine hours

Total overhead cost = $212,100

Total machine hours = 4,592 hours

Plantwide factory overhead rate = $212,100/4,592 = $46.20 per DLH

1. Determination of product factory overhead using

• Direct labor hour plantwide factory overhead rate ($122.74)

Product	Allocated Overhead Cost
Automobile Bumpers	$89,602
Valve Covers	$59,654
Wheels	$62,844
Total	$212,100

Automobile Bumpers
	Activity Base	Activity Rate	Direct labor overhead rate
Stamping Department
direct labor hours	560 DLH	$122.74	$68,735
Plating Department
direct labor hours	170	$122.74	$20,867
Total overhead cost	730	$122.74	$89,602

Valve Covers
	Activity Base	Activity Rate		Direct labor overhead rate
Stamping Department
direct labor hours	301 DLH	$122.74		$36,945
Plating Department
direct labor hours	185 DLH	$122.74		$22,709
Total overhead cost	486	$122.74		$59,654
Wheels
	Activity Base		Activity Rate		Direct labor overhead rate
Stamping Department
direct labor hours	339 DLH		$122.74		$41,610
Plating Department
direct labor hours	173 DLH		$122.74		$21,234
Total overhead cost	512 DLH		$122.74		$62,844

• Machine hours plant overhead rate ($46.20)

Product	Allocated Overhead Cost
Automobile Bumpers	$90,808
Valve Covers	$58,429
Wheels	$62,863
Total	$212,100

Computations:

Automobile Bumpers
	Activity Base	Activity Rate	Machine hour overhead rate
Stamping Department
Machine Hours	798 MH	$46.20	$36,859
Plating Department
Machine Hours	1,168	$46.20	$53,949
Total overhead cost	1,966	$46.20	$90,808

Valve Covers
	Activity Base	Activity Rate	Machine hour overhead rate
Stamping Department
Machine Hours	557	$46.20	$25,727
Plating Department
Machine Hours	708	$46.20	$32,702
Total overhead cost	1,265	$46.20	$58,429

Wheels
	Activity Base	Activity Rate	Machine hour overhead rate
Stamping Department
Machine Hours	599	$46.20	$27,667
Plating Department
Machine Hours	762	$46.20	$35,196
Total overhead cost	1,361	$46.20	$62,863