The management of Nova 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 Nova:

Fabrication Department factory overhead$697,000

Assembly Department factory overhead $287,000

Total$984,000

Direct labor hours were estimated as follows:

Fabrication Department 4,100hours

Assembly Department 4,100hours

Total 8,200hours

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 1.20 dlh 2.80dlh

Assembly Department 2.80 dlh 1.20dhl

Direct Labor hours per unit 4.00 dhl 4.00dhl

Question. Determine the per unit factory overhead allocated to the gasoline and diesel under the SINGLE PLANTWIDE FACTORY OVERHEAD RATE METHOD, using DIRECT LABOR HOURS AS ACTIVITY BASE

Gasoline engine ? per Unit

Diesel engine ? per Unit

Can someone please answer this question and explain the concept? Thank you.