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The management of Fireboll Industries Inc, manufactures gasoline and diesel engines through two production departments, Fabrication and Assembly. Management needs accurate product cost information in
The management of Fireboll Industries Inc, manufactures gasoline 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 tate method. The following factory overhead was budgeted for Firebott: $455.000.00 1 Fabrication Departinent factory overhead Assembly Department factory overhead 285,200.00 5741.200.00 Total Direct labor hours were estimated as follows: Fabrication Department 4,550 hours Assembly Department 5400 Total 9.950 hours In addition, the direct labor hours (dih) used to produce a unit of each product in each department were determined from engineering records, as follows: Production Departments Gasoline Engine Diesel Engine Fabrication Department 2.9 din 22 din Assembly Department 22 29 Direct labor hours per unit 5.1 dih 5.1 din Required: a. Determine the per unit factory overhead allocated to the gasoline and diesel engines under the single plantvide factory overhead rate method using direct labor hours as the activity base b. Determine the per unit factory overhead allocated to the gasoline and diesel engines under the multiple production department factory overhead rate method, using direct labor hours as the activity base for each department (1) Recommend to management a product costing approach based on your analyses in (a) and (b), 2) Give a reason for your answer required, round all per answers to the nearest cent a Determine the per-unit factory overhead allocated to the gasodne and diesel engines under the single plannwide factory overhead rate method, using direct labor hours as the activity base. It required, round all per-direct labor hours and por unit answers to the nearest cent per unit Gasoline engine Diesel engine $ perunt Multiple Production Department Method b. Determine the per unit factory overhead allocated to the gasoline and diesel engines under the multiple production department factory overhead rate method using direct labor hours as the activity base for each department If required, round all per unit answers to the nearest cent per unit Gasoline engines Diesel engine S Der und
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