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. | $248,000 | 10,000 dlh | 16 dlh | 4 dlh |
Finishing Dept. | 72,000 | 10,000 | 4 | 16 |
Totals | $320,000 | 20,000 dlh | 20 dlh | 20 dlh |
Determine the overhead in the Painting Department for each unit of Product B if Blue Ridge Marketing Inc. uses a multiple department rate system.
a.$99.20 per unit
b.$28.80 per unit
c.$49.60 per unit
d.$64.00 per unit
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