Question 1)

Question 2)

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 through 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 factory overhead rate method. The following factory overhead was budgeted for Nova: $418,000 Fabrication Department factory overhead Assembly Department factory overhead 190,000 Total $608,000 Direct labor hours were estimated as follows: Fabrication Department 3,800 hours Assembly Department 3,800 Total 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 1.30 dih 2.70 dih Assembly Department 2.70 1.30 Direct labor hours per unit 4.00 dih 4.00 din 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 $ per unit 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. $ per unit Gasoline engine Diesel engine per unit Product Costs using Activity Rates Nozama.com Inc. sells consumer electronics over the Internet. For the next period, the budgeted cost of the sales order processing activity is $207,900, and 18,900 sales orders are estimated to be processed. a. Determine the activity rate of the sales order processing activity. $ per sales order b. Determine the amount of sales order processing cost associated with 10,800 sales orders