Question

Single Plantwide Factory Overhead Rate

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 $362,600.

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

Direct Labor HoursMachine Hours

Blending Department  

Whole milk390 930

Skim milk420 840

Cream330 340

1,140 2,110

Packing Department  

Whole milk480 600

Skim milk750 750

Cream220 240

1,450 1,590

Total2,590 3,700

Required:

1. Determine the single plantwide factory overhead rate, using each of the following allocation bases: (a) direct labor hours and (b) machine hours. If required, round all amounts to the nearest dollar.

a. Direct labor overhead rate$ per direct labor hour

b. Machine hour overhead rate$ per machine hour

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.

Whole MilkSkim MilkCream

Direct labor hours$$$

Machine hours$$$

Answer 1

Explanation:

1) Determination of Single Plantwide Factory Overhead Rate:

(a) Based on Direct Labor Hours

Total factory overhead = $362,600
Total direct labor hours = 2,590 hours

Single Plantwide Factory Overhead Rate = Total factory overhead/ Total direct labor hours
= $362,600/ 2,590 = $140 per direct labor hour

(b) Based on Machine Hours

Total factory overhead = $362,600
Total machine hours = 3,700 hours

Single Plantwide Factory Overhead Rate = Total factory overhead/ Total machine hours
= $362,600/ 3,700 = $98 per machine hour

2(a) Product Factory Overhead Cost using the direct labor hour plantwide factory overhead rate:

2(b) Product FactoryOverhead Cost using the machine hour plantwide factory overhead rate: