The management of Firebolt 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 rate method The following factory overhead was budgeted for Firebolt 1 Fabrication Department factory overhead $557,750 00 2 Assembly Department factory overhead 257,550 00 3 Total $815,300 00 Direct labor hours were estimated as follows Fabrication Department 4,850 hours Assembly Department 5,050 Total 9,900 hours In addition, the direct labor hours (dlh) 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 3 1 dlh 2 1 dlh Assembly Department 2 1 3 1 Direct labor hours per unit 5 2 dlh 5 2 dlh Required a 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 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 c (1) Recommend to management a product costing approach, based on your analyses in (a) and (b) (2) Give a reason for your answer If required, round all per unit answers to the nearest cent 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 Gasoline engine per unit Diesel engine per unit

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The management of Firebolt Industries Inc. manufactures gasoline and diesel engines through two production departments, Fabrication and Assembly. Management needs accurate product cost information in

The management of Firebolt 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 rate method. The following factory overhead was budgeted for Firebolt:

1	Fabrication Department factory overhead	$557,750.00
2	Assembly Department factory overhead	257,550.00
3	Total	$815,300.00

Direct labor hours were estimated as follows:


Fabrication Department	4,850	hours
Assembly Department	5,050
Total	9,900	hours

In addition, the direct labor hours (dlh) 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	3.1 dlh	2.1 dlh
Assembly Department	2.1	3.1
Direct labor hours per unit	5.2 dlh	5.2 dlh

Required:

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 the activity base.*

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.

*If required, round all per-unit answers to the nearest cent.

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.