Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Hello, please help me with this, I continue to get them incorrect. Single Plantwide and Multiple Production Department Factory Overhead Rate Methods and Product Cost
Hello, please help me with this, I continue to get them incorrect.
Single Plantwide and Multiple Production Department Factory Overhead Rate Methods and Product Cost Distortion The management of Nova Industries Inc. manufactures gasoline and diesel engines thrceugh two production departments, Fabrication and Assembly. Management needs accurate product cost information in order to guide product strategy. Presently, the company uses a single plantwide factory overhead rate for allocating factory overhead to the two products. However, management is considering the multiple production department factor/ overhead rate method. The following factory overhead was budgeted for Nova: 0 Tell Fabrication Department factory overhead Assembly Department factory overhead Total Direct labor hours were estimated as follows: Fabrication Department Assembly Department Total $646,000 266,000 $12, ooo 3,800 hours 3,800 7,600 hours In addition, the direct labor hours (dlh) used to produce a unit Of each product in each department were determined from engineering records, as follows: Production Departments Gasoline Engine Diesel Engine Fabrication Department Assembly Department Direct labor hours per unit 1.20 dlh 2.80 4.00 dlh 2.80 d'h 1.20 4.00 dlh Choices Are.docx - Word Hom Inser Dram Desi! Layo Refe Maili Revit View Help a. Determine the per-unit factory overhead allocated to the gasoline and diesel engines under the single plantwide factory overhead rate method, using direct labor hours as the activity base. Gasoline engine Diesel engine per unit per unit Paste Clipboard Font Paragraph Styles styles Editing b. Determine the per-unit factory overhead allocated to the gasoline and diesel engines under the multiple production department factory overhead rate method, using direct labor hours as the activity base for each department. Gasoline engine Diesel engine per unit per unit c. Recommend to management a product costing approach, based on your analyses in (a) and (b). Management shceJtd select the factory overhead rate method of allocating overhead costs. The overhead per unit. Each product uses the direct labor Thus' the factory overhead rate method indicates that both products have the same factory rate method avoids the cost distortions by accounting for the overhead Choices for the drop arrow lines are as follows: multiple department, or single plantwide multiple departrnent, or single plantwide equally, or differently multiple departinent, or single plantwide increase, or decrease plantwide, or in each production department separately
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started