Question
Blue Ridge Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plantwide factory overhead rate for allocating overhead to products.
Blue Ridge Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plantwide factory overhead rate for allocating overhead to products. However, management is considering moving to a multiple department rate system for allocating overhead. The following table presents information about estimated overhead and direct labor hours.
Overhead Direct
Labor Hours (dlh) Product A B Painting Dept. $581,760 14,400 dlh 12 dlh 4 dlh Finishing Dept. 49,644 4,200 6 19 Totals $631,404 18,600 dlh 18 dlh 23 dlh The overhead from both production departments allocated to each unit of Product A if Blue Ridge Marketing Inc. uses the multiple production department factory overhead rate method is
a. $11.82 per unit
b. $40.40 per unit
c. $386.18 per unit
d. $555.72 per unit
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