Single Partwide and Multiple Production Department Factory Overhead Rate Methods and Product Cost Distortion The management of rebolt Industries Inc. manufactures online 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 Firebolt Fabrication Department factory overhead $380,000 Assembly Department factory overhead 152.000 Total $532.000 Direct labor housemated as follows: Fabrication Department 3.800 hours Assembly Department 1,500 7.600 hours In addition, the direct bor hours (m) used to produce a unit of each product nach department were determined from engineering records, as follows: Production Des Gasoline Engine Diesel Engine OBO 2.20 h Assembly Department 220 a. Determine the factory readcated to the gasoline and diesel engines under the single plan de factory overhead rate method, using direct labor hours as the activity base Determine the per un factory out located to the active and des engines under the male production department factory overhead rate method, using direct labor hours as the activity base for Determine the per factory overhead located to the gasoline and diesel engines under the multiple production department factory overhead rate method, using direct labor hours as the activity base for nach department Cascine egne engine Recommend to management a product casting approach, based on your analyses in (a) and (b). Management should select the factory overhead rate method of allocating overhead costs. The Thus, the same factory overhead perunt. Each product uses the direct labor hours factory overhead rate method indicates that both products have the rate method avoid the cost distortions by accounting for the overhead Single Partwide and Multiple Production Department Factory Overhead Rate Methods and Product Cost Distortion The management of rebolt Industries Inc. manufactures online 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 Firebolt Fabrication Department factory overhead $380,000 Assembly Department factory overhead 152.000 Total $532.000 Direct labor housemated as follows: Fabrication Department 3.800 hours Assembly Department 1,500 7.600 hours In addition, the direct bor hours (m) used to produce a unit of each product nach department were determined from engineering records, as follows: Production Des Gasoline Engine Diesel Engine OBO 2.20 h Assembly Department 220 a. Determine the factory readcated to the gasoline and diesel engines under the single plan de factory overhead rate method, using direct labor hours as the activity base Determine the per un factory out located to the active and des engines under the male production department factory overhead rate method, using direct labor hours as the activity base for Determine the per factory overhead located to the gasoline and diesel engines under the multiple production department factory overhead rate method, using direct labor hours as the activity base for nach department Cascine egne engine Recommend to management a product casting approach, based on your analyses in (a) and (b). Management should select the factory overhead rate method of allocating overhead costs. The Thus, the same factory overhead perunt. Each product uses the direct labor hours factory overhead rate method indicates that both products have the rate method avoid the cost distortions by accounting for the overhead
