Ratchford Clocks Manufactures Alarm Clocks and Wall Clocks and Allocates

Essay

Ratchford Clocks manufactures alarm clocks and wall clocks and allocates overhead based on direct labor hours. The production process is set up in three departments: Assembly, Finishing, and Calibrating. The following is information regarding the direct labor used to produce one unit of the two clocks: $$\begin{array} { | l | c | c | c | } \hline \text { Per Unit Hours } & \text { Assembly } & \text { Finishing } & \text { Calibrating } \\\hline \text { Alarm clocks } & 3 & 1 & 1 \\\hline \text { Wall clocks } & 2 & 3 & 2 \\\hline & \underline { 5 } & \underline { 4 } & \underline { 3 } \\\hline\end{array}$$ The budget includes the following factory overhead by department: $\begin{array}{|l|c|}\hline \text { Assembly Department } & \$ 595,000 \\\hline \text { Finishing Department } & 200,000 \\\hline \text { Calibrating Department } & 140,000 \\\hline \text { Total } & \$ 935,000 \\\hline\end{array}$ Ratchford Clocks is planning to manufacture 50,000 alarm clocks and 10,000 wall clocks.
a) Determine the total number of hours that will be needed by department.
b) Determine the factory overhead rate by department using the multiple production department factory overhead rate method.
c) Determine the amount of factory overhead to be allocated to each unit of alarm clocks and wall clocks.
d) Determine the amount of total factory overhead to be allocated to the alarm clocks and wall clocks.