Evaluate the product factory overhead costs

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Reference no: EM136103

Spruce Dairy Company manufactures three products - skim milk, whole milk, and cream - in two production departments, Blending and Packing. The factory overhead for Spruce Dairy is $270,000. The three products consume both machine hours and direct labor hours in the two production departments as given:

                                         Direct Labor Hours       Machine Hours

Blending Department   

Whole Milk                                270                                790

Skim Milk                                   290                                720

Cream                                         240                                290

                                                     800                                1800

Packing Department      

Whole Milk                                 330                                 460

Skim Milk                                    520                                 560

Cream                                         150                                  180

                                                    1,000                                1,200

                                                    1,800                                 3,000

a. Evaluate the single plant-wide factory overhead rate, using each of the subsequent allocation bases: (a) direct labor hours and (b) machine hours.

b. Evaluate the product factory overhead costs, using (a) the direct labor hours plant-wide factory overhead rate and (b) the machine hour plant-wide factory overhead rate.

c. Evaluate the multiple production department factory overhead rates, using machine hours for direct labor hours for the Packing Department and the Blending Department.

Reference no: EM136103

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