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 Assembering 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 budeted for Nova: 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 he activity base. GasolineengineDieselengine$$perunitperunit Determine the per-unit factory overhead allocated to the gasoline and diesel engines under the multiple production department factory overhead rate method, tirect labor hours as the activity base for each department. Gasoline engine per unit Diesel engine $ per unit =. Recommend to management a product costing approach, based on your analyses in (a) and (b). ndicates that both products have the same factory overhead per unit. Each product uses the direct labor hours . Thus, the nethod avoids the cost distortions by accounting for the overhead