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Single Plantwide and Multiple Production Department Factory Overhead Rate Methods and Product Cost Distortion Pineapple Motor Company manufactures two types of specialty electric motors, a

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Single Plantwide 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 $163,800 608,400 $772,200 Testing Department Total Direct machine hours were estimated as follows: Assembly Department Testing Department 3,900 hours 7,800 11,700 hours Total In addition, the direct machine hours (dmh) used to produce a unit of each product in each department were determined from engineering records, as follows Commercial Residential 0.50 dmh 1.00 dmh 2.00 .50 dmh 3.00 dmh Assembly Department Testing Department Total machine hours per unit a. Determine the per-unit factorv overhead allocated to the Commercial and Residental motors under the single plantwide factory overhead rate method, 2.00 Commercial Residential Assembly Department 0.50 dmh 1.00 dmh 1.00 1.50 dmh 3.00 dmh 2.00 Testing Department Total machine hours per unit 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 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 Residential Motor c. Recommend to management a product costing approach, based on your analyses in (a) and (b). per unit per unit per unit per unit The factory overhead determined under the single plantwide factory overhead rate and mltiole production department factory overhead rate methods are "However, This is because the ratio of direct machine hours used by each product from the two departments is V the easier . Thus, peach should consider the two production department overhead rates are rate method in this situation

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