Chapter 18

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. $259,600 11,200 dlh 15 dlh 6 dlh Finishing Dept. 70,800 10,000 7 19 Totals $330,400 21,200 dlh 22 dlh 25 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. $93.51 per unit b. $42.48 per unit c. $139.08 per unit d. $23.18 per unit