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please help me with this thank you Single plantwide and multiple production department factory overhesd rate methods and product cost distortion The management of Nova
please help me with this thank you
Single plantwide and multiple production department factory overhesd rate methods and product cost distortion The management of Nova Industries Inc. manufactures gasoline and diesel engines through two production departments, Fabrication and Assembly. Management needs accurate product cost information in order to gulde product strategy. Presentiy, the company uses a single plantwide factory overhead rate for allocating factory overhead to the two products. However, management is considering the muluple production department factory overhead rate method, The following factory overhead was budgeted for Nova: In addition, the direct labor hours (dih) used to produce a unit of each product in each department were determined from engincering records, as follows: a. Determine the per-unit factory overhead allocated to the gasoline ana owrer cunines under the single plantwide factory overhead rate method, using direct labor hours as the activity base. Gasoline engine : per unit b. Determine the per-unit faciory overhead allocated to tho gasoline and diesel engines under the multiple production department factory overhead rate method, using Diesel engine 5 x per unit 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 $ per unit Diesel engine ? x per unit b. Determine the per-unit factory overhead allocated to the gasoline and diesel engines under the multiple praduction department factory overhead rate method, using direct labor hours as the activity base for each department. Gasoline engine : x per unit Diesel engine 1 x per unit c. Recommend to management a product costing approach, based on your analyses in (a) and (b) Management should select the factory overhead rate method of allocating overhead costs. The P factory overhead rate method indicates that both products have the same foctory overhead per unit. Each product uses the direct labor hours rate miethod avoids the cost dittortions by accounting for the overhead Step by Step Solution
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