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title ALGO Single and Multiple Production Department atury Overhead Rate Hethods and Product Cort stortion The management of Nova Industries Inc. montatures line and diesel

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title ALGO Single and Multiple Production Department atury Overhead Rate Hethods and Product Cort stortion The management of Nova Industries Inc. montatures line 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 planwide actory uverted rate for locating 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 ALGO Fabrication Department factory overhead Assembly Department factory overhead Total $440.000 200,000 $540,000 2022011 stateme...6 Direct labor hours were estimated as follow Reference Le for Emel Fabrication Department Assembly Department Total 4,000 hours 4.000 3,000 hours In addition, the direct laber heun en used to produce a unit of each product on each department were determined from engineering records, Pows: Booty workout 2. Production Departments Gasoline Engine Diesel Engine Fabrication Department 6.0 di od COWGcg and LGO Production Departments Gasoline Engine Diesel Engine Fabrication Department 6.0 in 4.0 de Assembly Department 4.0 6.0 Direct labor hours per unit 10.0 din LGO 10.0 20220 per unit per unit a. Determine the per-unit factory overhead alocated to the gasoline and diesel engines under the single plantwide factory overhead rate method using director hours as they are Gasoline engine Diesel engine b. Determine the per unit factory overhead allocated to the goline and diesel engines under the multiple production department factory overed rate method, using direct labor hours as the activity base for each department Gasoline engine Diesel engine per unit c. Recommend to management a product costing approach, based on your analyses in (a) and (b). Management should select the factory overhead rate method of allocating overhead costs. The - overhead rate method indicates that both products have the same factory overhead per unit. Each product uses the directibor bours Thus, the rate method avoid the cost distortions by accounting for the overhead Reference for me per unit Booty work 2.mod

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