Single Piantain and Multiple Production Department Factory Overhead Rate Methods and Product Cost Distortion Pineapple Motor Company manufactures two types of specialty electric motors, a commercial motor and a residential motor, through two production departments, Assembly and Testing Presently, the company uses a single plantwide factory overhead rate for allocating factory overhead to the two products. However, management is considering using the multiple production department factory overhead rate method. The following factory overhead was budgeted for Pineapple Assembly Department $159,600 Testing Department 615,600 Total $775,200 Direct machine hours were estimated as follow Automby Department 3,000 hours Testing Department 7,600 Total 11,400 hours In addition, the direct machine hours (ah) used to produce a unit of each product in each department were determined from engineering records, as follows: Commercial Residential Assembly Department 0.50 dni 1.00 am Testing Department 1.00 2.00 Total machine hours per unit 3.00 h a. Determine the per-unit factory overhead allocated to the commercial and Residential motors under the single plantwide factory overhead rate method, using direct machine hours as the allocation base Commercial Motor per unit 1.50 m Per unit Residential Motor b. Determine the per-unit factory overhead allocated to the commercial and Residential motors under the multiple production department factory overhead rate method using direct machine hours as the allocation base for each department Commercial Motor per unit a. Determine the per unit factory overhead allocated to the Commercial and Residential motors under the single plantwide factory overhead rate method, ung direct machine hours as the allocation base Commercial Motor per unit Residential Motor per unit b. Determine the per unit factory overhead allocated to the Commercial and Residential motors under the multiple production department factory overhead rate method, using direct machine hours as the allocation base for each department Commercial Motor per unit Residential Motor per unit c. Recommend to management a product casting approach, based on your analyses in (a) and (b). The factory overhead determined under the single plantwide factory overhead rate and multiple production department factory overhead rate methods are This is because the ratio of direct machine hours used by each product from the two departments is However, the two production department overhead rates are Thus, Peach should consider the easier rate method in this situation Check My Work Previous Next >
