Textbook Problem

Single plantwide factory overhead rate

Spoiled 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 $299,700.

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	260	650
Skim milk	245	710
Cream	215	260
	720	1,620
Packing Department
Whole milk	470	500
Skim milk	300	415
Cream	130	165
	900	1,080
Total	1,620	2,700

Instructions

1. Determine the .single plantwide factory overhead rate, using each of the following allocation bases: (A) direct labor hours and (B) machine hours.

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.