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
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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Blue Ridge Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plantwide factory
Overhead |
Direct Labor Hours (dlh) |
Product | |||||||
| A | B | ||||||||
| Painting Dept. | $477,774 | 11,400 | dlh | 12 | dlh | 4 | dlh | ||
| Finishing Dept. | 83,126 | 8,900 | 4 | 20 | |||||
| Totals | $560,900 | 20,300 | dlh | 16 | dlh | 24 | dlh |
The overhead from both production departments allocated to each unit of Product B if Blue Ridge Marketing Inc. uses the multiple production department factory overhead rate method is
a.$540.28 per unit
b.$41.91 per unit
c.$9.34 per unit
d.$354.44 per unit
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