Single Plantwide Factory Overhead Rate California Chrome Company manufactures th

Question

Single Plantwide Factory Overhead Rate

California 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 California Chrome is $227,500.

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

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.

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.

Check My Work

Direct Labor Hours Machine Hours Stamping Department Automobile bumpers 270 620 Valve covers 290 570 Wheels 230 230 790 1,420 Plating Department Automobile bumpers 320 410 Valve covers 500 510 Wheels 140 160 960 1,080 Total 1,750 2,500

Explanation / Answer

1a) Direct labor overhead rate = 227500/1750 = 130

b)  Machine hour overhead rate = 227500/2500 = 91

2)

Direct labor hours:

Automobile bumpers = (270+320)*130 = 76700

Valve covers = (290+500)*130 = 102700

Wheels = (230+140)*130 = 48100

Machine hours:

Automobile bumpers = (620+410)*91 = 93730

Valve covers = (570+510)*91 = 98280

Wheels = (230+160)*91 = 35490

b)  Machine hour overhead rate = 227500/2500 = 91

2)

Direct labor hours:

Automobile bumpers = (270+320)*130 = 76700

Valve covers = (290+500)*130 = 102700

Wheels = (230+140)*130 = 48100

Machine hours:

Automobile bumpers = (620+410)*91 = 93730

Valve covers = (570+510)*91 = 98280

Wheels = (230+160)*91 = 35490

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