Eingle Phantride and Mulbele Prodvction Department Factory Overhesd Fate Methodt and Product Cost Distertion The manapement of Nova Indurtries Inc. manulactures gaseline and diesel engines through two productien departments, Fabrication and Assembly. Management needs accurate product cont. iformation in order to puide product strategy. Presently, the cerpany vies a single plantwide factory overtead rate for albcatimg foctory overhead to the two products. However, manegement is considering the multiple production degartment factory overhead rate method. The following factory overhead was budgeted for Novat Drect tabor hours were estrated as ponows: In addwion, the direct Lbor houn (dih) uled to product a unit of each product is each department were determined from engineering recoeds, as followat a. Determine the percuni factery overiead allocated to the gesoline and desel enghes under the single plantide factecy ovechead rate method, uving direct labor heurs as the actinaty base. ausoline engine is Zper unit Diesel engine 1 per unit activity base for each departmant. Ner unnit Gaveline engine 1 per unt Diesal erpint is per unit actovity base for each department. Gaspline engine Diesel enpine c. Mecemmend ta manageme Manapement should select the have the same foctory overtead per unit. Each product uses the deect labec hours Vhe overtiead per unit per unt preduct costing approach, baved on your aralyses in (a) and (b). factory overhead rabe method of allocating everhead conts. The , Thus, the rate methed avolis the cost diatortions by ascounting for