Question - Blue Ridge Marketing Inc. manufacturing two products, A and B. Presently, the company uses a single plant-wide 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.
|
$606,900
|
15,000 dlh
|
13 dlh
|
3 dlh
|
|
Finishing Dept.
|
71,442
|
8,100
|
5
|
16
|
|
Totals
|
$678,342
|
23,100 dlh
|
18 dlh
|
19 dlh
|
Determine the overhead from both production departments allocated to each unit of Products B if Blue Ridge Marketing Inc. uses a multiple department rate system.
a. $8.82 per unit
b. $570.08 per unit
c. $40.46 per unit
d. $262.50 per unit