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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. | $253,200 | 11,700 | dlh | 7 | dlh | 8 | dlh | ||
Finishing Dept. | 71,500 | 10,000 | 2 | 6 | |||||
Totals | $324,700 | 21,700 | dlh | 9 | dlh | 14 | dlh |
Using a single plantwide rate, determine the overhead rate per unit for Blue Ridge Marketing Inc.'s Product B.
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