Four Finger Appliance Company manufactures small kitchen appliances. The product line consists of blenders and toaster ovens. Four Finger Appliance presently uses the multiple production department factory overhead rate method. The factory overhead is as follows: Assembly Department $186,000
Test and Pack Department 120,000
Total $306,000

The direct labor information for the production of 7,500 units of each product is as follows:
Department
Assembly Test and Pack
Department Blender 750 dlh 2,250 dlh
Toaster oven 2,250 750
Total 3,000 dlh 3,000 dlh

Four Finger Appliance used direct labor hours to allocate production department factory overhead to products. If required, round all per unit answers to the nearest cent.

a. Determine the two production department factory overhead rates.
b. Determine the total factory overhead and the factory overhead per unit allocated to each product.

A. Assembly Department =$62 per direct labor hour

Test and Pack Department=$40 per direct labor hour

B. TOTAL FACTORY OVERHEAD

Blender=$136,500

Toaster oven=$169,500

FACTORY OVERHEAD PER UNIT

Blender=$18.20

Toaster oven=$22.60

Explanation:

a. Calculation to Determine the two production department factory overhead rates.

Calculation for FACTORY OVERHEAD RATE

Assembly Department =$186,000/3,000 dlh

Assembly Department =$62 per direct labor hour

Test and Pack Department=120,000/3,000 dlh

Test and Pack Department=$40 per direct labor hour

Therefore the two production department factory overhead rates are:

Assembly Department =$62 per direct labor hour

Test and Pack Department=$40 per direct labor hour

b.Calculation to Determine the total factory overhead and the factory overhead per unit allocated to each product.

Calculation for TOTAL FACTORY OVERHEAD

Blender=($62*750 dlh)+($40*2,250 dlh)

Blender=$46,500+$90,000

Blender=$136,500

Toaster oven=($62*2,250 dlh)+($40*750 dlh)

Toaster oven=$139,500+$30,000

Toaster oven=$169,500

Therefore the TOTAL FACTORY OVERHEAD will be :

Blender=$136,500

Toaster oven=$169,500

Calculation for FACTORY OVERHEAD PER UNIT

Blender=$136,500/7,500 units

Blender=$18.20

Toaster oven=$169,500/7,500 units

Toaster oven=$22.60

Therefore FACTORY OVERHEAD PER UNIT will be:

Blender=$18.20

Toaster oven=$22.60

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