Problem Set: Module 3еBookGasoline engine $480V per unitDiesel engine2$480V per unitb. Determine the per-unit factory overhead allocated to the gasoline and diesel engines under the multiple production department factory overhead rate method, using direct laborhours as the activity base for each department.Gasoline engine $204X per unitDiesel engine$484X per unitc. Recommend to management a product costing approach, based on your analyses in (a) and (b).Management should select the multiple department- v factory overhead rate method of allocating overhead costs. The single plantwidefactory overhead ratemethod indicates that both products have the same factory overhead per unit. Each product uses the direct labor hours differently- V. Thus, themultiple departmentrate method avoids the cost distortions by accounting for the overhead in each production department separately Problem Set: Module 3еBookSingle Plantwide and Multiple Production Department Factory Overhead Rate Methods and Product Cost DistortionThe management of Nova Industries Inc. manufactures gasoline and diesel engines through two production departments, Fabrication and Assembly. Management needs accurateproduct cost information in order to guide product strategy. Presently, the company uses a single plantwide factory overhead 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$697,000Assembly Department factory overhead287,000Total$984,000Direct labor hours were estimated as follows:Fabrication Department4,100 hoursAssembly Department4,100Total8,200 hoursIn addition, the direct labor hours (dlh) used to produce a unit of each product in each department were determined from engineering records, as follows:Production DepartmentsGasoline Engine Diesel EngineFabrication Department1.20 dlh2.80 dlhAssembly Department2.801.20Direct labor hours per unit4.00 dlh4.00 dlha. 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 theactivity base.

Manufacturing overhead are indirect costs that need to be allocated to product to ensure that all…

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 204 X per unit Diesel engine 84 x per unit Recomme product costing approach haced on (a) and (h)

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 204 X per unit Diesel engine 84 x per unit Recomme product costing approach haced on (a) and (h)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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