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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

Assembly Department factory overhead Tota

Direct labor hours were estimated as follows:

$\backslash$table$[[$Fabrication Department,$4,100$ hours$],[$Assembly Department,$4,100],[$Total$,8,200$ 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:

$\backslash$table$[[$Production Departments,Gasoline Engine,Diesel Engine$],[$Fabrication Department,$1\mathrm{.}30$ dlh$,2\mathrm{.}70$ dlh$],[$Assembly Department,$2\mathrm{.}70,1\mathrm{.}30],[$Direct labor hours per unit,$4\mathrm{.}00$ dlh$,4\mathrm{.}00$ dlh$]]$

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.

Gasoline engine $q,$ per unit

Diesel engine $ $$ per unit

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.

Gasoline engine $q,$ per unit

Diesel engine $$ per unit

c$.$ Recommend to management a product costina approach, based on your analyses in $($a$)$ and $($b$).$

Management should select the $q,$ factory overhead rate method of allocating overhead costs. The $q,$ factory overhead rate method indicates that both products have the same factory overhead per unit. Each product uses the direct labor hours $q,$ :$.$ Thus, the $q,$ rate method avoids the cost distortions by accounting for the overhead $q,$

#

$3$

$

$\%$

$5$

${?}^{{?}^{?}}$

$q,$

$8$

$$

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$4$

$6$

$8$

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