Blue Ridge Marketing Inc. manufactures two products, A and B. Presently, the com
ID: 2454058 • Letter: B
Question
Blue Ridge Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plantwide factory overhead rate for allocating overhead to products. However, management is considering moving to a multiple department rate system for allocating overhead. The following table presents information about estimated overhead and direct labor hours.
Determine the overhead from both production departments allocated to each unit of Product A if the company uses a multiple department rate system.
Select the correct answer.
Overhead Direct Labor
Hours (dlh) Product A B Painting Dept. $448,404 13,200 dlh 15 dlh 7 dlh Finishing Dept. 59,880 6,000 4 16 Totals $508,284 19,200 dlh 19 dlh 23 dlh
Explanation / Answer
For Product A Painting Department Costs Allocated (based on the no. of daily labour hours) 509.55 Finishing Department Costs Allocated (based on the no. of daily labour hours) 39.92 Total Overhead per unit of product A allocated 549.47 Option d