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 $330,000. 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 560 770
Skim milk 360 620
Cream 280 480
1,200 1,870
Packing Department
Whole milk 170 1,100
Skim milk 180 680
Cream 155 720
505 2,500
Total 1,705 4,370
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 $192,000
Packing Department 140,000
Total $332,000
Required:
If required, round all amounts to the nearest dollar.
a. Determine the multiple production department factory overhead rates, using direct labor hours for the Blending Department and machine hours for the Packing Department.
b. Determine the product factory overhead costs, using the multiple production department rates in (1).