Blue Ridge Marketing Inc. manufactures two products, A and B. Presently, the com
ID: 2526511 • 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.
Overhead
Direct
Labor Hours (dlh)
Product
A
B
Painting Dept.
$249,400
9,900
dlh
15
dlh
6
dlh
Finishing Dept.
78,600
9,300
3
20
Totals
$328,000
19,200
dlh
18
dlh
26
dlh
Determine the overhead in the Painting Department for each unit of Product B if Blue Ridge Marketing Inc. uses a multiple department rate system.
a.$102.50 per unit
b.$151.14 per unit
c.$50.71 per unit
Overhead
Direct
Labor Hours (dlh)
Product
A
B
Painting Dept.
$249,400
9,900
dlh
15
dlh
6
dlh
Finishing Dept.
78,600
9,300
3
20
Totals
$328,000
19,200
dlh
18
dlh
26
dlh
Explanation / Answer
Answer