Single Planwide and Multiple Production Department Factory Overhead Rate Methods and Product Cost Distortion Eclipse Motor Company manufactures two types of specialty electric motors, commercial motor and residential motor through two production departments, Assembly and Tecno Precently, the company uses a single plantwise factory overhead rate for allocating factory overhead to the two products. However mapement is considering using the multiple production deatment factory overhead rate method. The following factory overhead was budgeted for Assembly Department Testing Department 5280.000 800,000 15.000.000 Direct machine hours were estimated as follows: Assembly becament 4.000 hours Testing Department 5.000 3.000 hours , the drar machine hours aimha used to pro 2 anr of each product in Aadh department wore determined from anginaating records, 25 Commercial Residential 3.6 omh Assembly Department 6.0 1.5 Testing Department Total machine hours per unit 8.0 dm 45 am 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 per unit Residential per unit . 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 per unit Residential per unit c. Recommend to management a product conting approach, based on your analyses in (a) and (b). 1. The management should consider multiple production department factory overhead rate methods, because this method calculates the cost more accurately and considers the fact that commercial products use more costly overheads than residential products. 2. The management should consider single plantwide factory overhead rate methods, because this method calculates the cost more accurately and considers the fact that the overheads are applied evenly based on the direct labor hours. 3. The management could consider either multiple production department factory overhead rate method or the single plantwide rate, as both these methods have the same effect on the final costs