Kettle Factory Produces Two Similar Products: Gloves and Mittens

question 32

Essay

Kettle Factory produces two similar products: gloves and mittens. The total factory overhead budget is $1,050,000 with 600,000 estimated direct labor hours. It is further estimated that glove production will require 375,000 direct labor hours and mitten production will require 225,000 direct labor hours.
a.Determine the single plantwide factory overhead rate based on direct labor hours.
b.How much is the factory overhead cost per pair of gloves if each pair requires 2 hours to produce?
c.How much is the factory overhead cost per pair of mittens if each pair takes 1.5 hours to produce?
d.How much total factory overhead will be allocated to glove production if 187,500 pairs are budgeted and 190,000 pairs are actually produced during the period?
e.How much total factory overhead will be allocated to mitten production if 150,000 pairs are budgeted and 140,000 pairs are actually produced during the period?

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Definitions:

Output

The amount of goods or services produced by a business, sector, or economy over a specific period.

Explicit Costs

Direct, out-of-pocket payments for costs of production, such as wages, rent, and materials.

Entrepreneur's Potential Earnings

The forecasted income an entrepreneur can expect from their business venture, taking into account risks and opportunities.

Annual Lease

A contract for the rental of property, typically real estate, that lasts for one year.