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 $220,800.
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 |
800 |
| Valve covers |
300 |
560 |
| Wheels |
340 |
600 |
|
1,200 |
1,960 |
| Plating Department |
|
|
| Automobile bumpers |
170 |
1,170 |
| Valve covers |
180 |
710 |
| Wheels |
175 |
760 |
|
525 |
2,640 |
| Total |
1,725 |
4,600 |
The management of Orange County Chrome Company now plans to use the multiple production department factory overhead rate method. The total factory overhead associated with each department is as follows:
|
1
|
Stamping Department
|
$115,200.00
|
|
2
|
Plating Department
|
105,600.00
|
|
3
|
Total
|
$220,800.00
|
Required: 1. Determine the multiple production department factory overhead rates, using direct labor hours for the Stamping Department and machine hours for the Plating Department.
2. Determine the product factory overhead costs, using the multiple production department rates in (1).