Kettle Factory Produces Two Similar Products - Gloves and Mittens

question 10

Short Answer

Kettle Factory produces two similar products - gloves and mittens.  The total plant 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 plant 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:

Business Combination

A business combination is a transaction or event where an acquirer obtains control of one or more businesses, often in the form of mergers, acquisitions, or consolidations.

Diversification

An investment strategy aimed at reducing risk by allocating investments among various financial instruments, industries, or other categories.

Vertical Integration

A strategy where a company expands its operations into different stages of production or distribution within the same industry.

Consolidated Cash Account

A combined account that aggregates the cash balances of a parent company and its subsidiaries to give a total cash figure in consolidated financial statements.