Fabrication Department 4,200 hours Assembly Department 4,200 Total 8,400 hours In addition, the direct labor hours (dih) used to produce a unit of each product in each department were determined from engineering records, as follows: Production Departments Gasoline Engine Diesel Engine Fabrication Department 1.30 dlh 2.70 dlh. Assembly Department 2.70 1.30 Direct labor hours per unit 4.00 dih 4.00 dlh a. 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 the activity base. Gasoline engine $ 360 per unit 360✔ per unit Diesel engine 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 $ 296 X per unit Diesel engine 424 X per unit
Fabrication Department 4,200 hours Assembly Department 4,200 Total 8,400 hours In addition, the direct labor hours (dih) used to produce a unit of each product in each department were determined from engineering records, as follows: Production Departments Gasoline Engine Diesel Engine Fabrication Department 1.30 dlh 2.70 dlh. Assembly Department 2.70 1.30 Direct labor hours per unit 4.00 dih 4.00 dlh a. 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 the activity base. Gasoline engine $ 360 per unit 360✔ per unit Diesel engine 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 $ 296 X per unit Diesel engine 424 X per unit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Please do not give image format and show all calculation
Transcribed Image Text:Fabrication Department
Assembly Department
Total
4,200 hours
4,200
8,400 hours
In addition, the direct labor hours (dih) used to produce a unit of each product in each department were determined from engineering records,
as follows:
Production Departments Gasoline Engine Diesel Engine
Fabrication Department
1.30 dlh
2.70 dlh
Assembly Department
2.70
1.30
Direct labor hours per unit
4.00 dlh
4.00 dlh
a. 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 the activity base.
Gasoline engine
360 per unit
360✔ per unit
Diesel engine
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 $
296 X per unit
Diesel engine $
424 X per unit
c. Recommend to management a product costing approach, based on your analyses in (a) and (b).
Management should select the multiple department
✓ factons overhead rate method of allocation overhead coste The
Transcribed Image Text:Single Plantwide and Multiple Production Department Factory Overhead Rate Methods and Product Cost Distortion
The management of Nova Industries Inc. manufactures gasoline and diesel engines through two production departments, Fabrication and
Assembly. Management needs accurate product 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
"Assembly Department factory overhead
Total
Direct labor hours were estimated as follows:
$546,000
210,000
$756,000
4
Fabrication Department
4,200 hours
Assembly Department
4,200
Total
8,400 hours
In addition, the direct labor hours (dih) used to produce a unit of each product in each department were determined from engineering records,
as follows:
Gasoline Engine Diesel Engine
1.30 dlh
2.70 dih
2.70
1.30
4.00 dih
4.00 dih
Production Departments
Fabrication Department.
Assembly Department
Direct labor hours per unit
a. Determine the per-unit factory overhead allocated to the gasoline and diesel engines under the single plantwide factory overhead rate
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