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. | $539,240 | 13,600 | dlh | 14 | dlh | 4 | dlh | ||
Finishing Dept. | 68,586 | 7,100 | 2 | 17 | |||||
Totals | $607,826 | 20,700 | dlh | 16 | dlh | 21 | dlh |
Determine the overhead from both production departments allocated to each unit of Product B if Blue Ridge Marketing Inc. uses a multiple department rate system.
a.$574.42 per unit
b.$9.66 per unit
c.$322.82 per unit
d.$39.65 per unit
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