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.	$250,600		8,500	dlh		15	dlh	2	dlh
Finishing Dept.	76,000		9,900			6		19
Totals	$326,600		18,400	dlh		21	dlh	21	dlh

The factory overhead allocated per unit of Product B in the Painting Department if Blue Ridge Marketing Inc. uses the multiple production department factory overhead rate method is

a.$35.50 per unit

b.$15.35 per unit

c.$58.96 per unit

d.$29.48 per unit

5. MC.18.61.ALGO

Kaumajet Factory produces two products: table lamps and desk lamps. It has two separate departments: Fabrication and Assembly. The factory overhead budget for the Fabrication Department is $594,825, using 360,500 direct labor hours. The factory overhead budget for the Assembly Department is $492,100, using 66,500 direct labor hours.

If a desk lamp requires 5 hours of fabrication and 8 hours of assembly, the amount of factory overhead that Kaumajet Factory will allocate to each unit of desk lamp using the multiple production department factory overhead rate method with an allocation base of direct labor hours is

a.$212.47

b.$7.40

c.$16.34

d.$67.45

6. MC.18.64

Using multiple department factory overhead rates instead of a single plantwide factory overhead rate

a.results in distorted product costs

b.results in more accurate product costs

c.applies overhead costs to all departments equally

d.is simpler and less expensive to compute than a plantwide rate