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Single Plantwide and Multiple Production Department Factory Overhead Rate Methods and Product Cost Distortion Eclipse Motor Company manufactures two types of specialty electric motors, a commercial motor and a residential motor, through two production departments, Assembly and Testing. Presently, the company uses a single plantwide factory overhead rate for allocating factory overhead to the two products. However, management is considering using the multiple production department factory overhead rate method. The following factory overhead was budgeted for Eclipse: Assembly Department Testing Department Total Direct machine hours were estimated as follows: Assembly Department Testing Department Total Assembly Department Testing Department Total machine hours per unit. In addition, the direct machine hours (dmh) used to produce a unit of each product in each department were determined from engineering records, as follows: $280,000 800,000 $1,080,000 Commercial $ Residential $ 4,000 hours 5,000 9,000 hours Commercial $ Residential per unit per unit Commercial 2.0 dmh 6.0 a. Determine the per-unit factory overhead allocated to the commercial and residential motors under the single plantwide factory overhead rate method, using direct machine hours as the allocation base. per unit per unit 8.0 dmh Residential 3.0 dmh b. Determine the per-unit factory overhead allocated to the commercial and residential motors under the multiple production department factory overhead rate method, using direct machine hours as the allocation base for each department. 1.5 4.5 dmh

Single Plantwide and Multiple Production Department Factory Overhead Rate Methods and Product Cost Distortion Eclipse Motor Company manufactures two types of specialty electric motors, a commercial motor and a residential motor, through two production departments, Assembly and Testing. Presently, the company uses a single plantwide factory overhead rate for allocating factory overhead to the two products. However, management is considering using the multiple production department factory overhead rate method. The following factory overhead was budgeted for Eclipse: Assembly Department Testing Department Total Direct machine hours were estimated as follows: Assembly Department Testing Department Total Assembly Department Testing Department Total machine hours per unit. In addition, the direct machine hours (dmh) used to produce a unit of each product in each department were determined from engineering records, as follows: $280,000 800,000 $1,080,000 Commercial $ Residential $ 4,000 hours 5,000 9,000 hours Commercial $ Residential per unit per unit Commercial 2.0 dmh 6.0 a. Determine the per-unit factory overhead allocated to the commercial and residential motors under the single plantwide factory overhead rate method, using direct machine hours as the allocation base. per unit per unit 8.0 dmh Residential 3.0 dmh b. Determine the per-unit factory overhead allocated to the commercial and residential motors under the multiple production department factory overhead rate method, using direct machine hours as the allocation base for each department. 1.5 4.5 dmh

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 6E: Eclipse Motor Company manufactures two types of specialty electric motors, a commercial motor and a...
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Single Plantwide and Multiple Production Department Factory Overhead Rate Methods and Product Cost Distortion Eclipse Motor Company manufactures two types of specialty electric motors, a commercial motor and a residential motor, through two production departments, Assembly and Testing. Presently, the company uses a single plantwide factory overhead rate for allocating factory overhead to the two products. However, management is considering using the multiple production department factory overhead rate method. The following factory overhead was budgeted for Eclipse: Assembly Department Testing Department Total Assembly Department Testing Department Total Direct machine hours were estimated as follows: Assembly Department Testing Department Total machine hours per unit $280,000 800,000 In addition, the direct machine hours (dmh) used to produce a unit of each product in each department were determined from engineering records, as follows: Commercial $ Residential $1,080,000 Commercial $ 4,000 hours 5,000 9,000 hours Residential a. Determine the per-unit factory overhead allocated to the commercial and residential motors under the single plantwide factory overhead rate method, using direct machine hours as the allocation base. per unit per unit Commercial 2.0 dmh 6.0 8.0 dmh b. Determine the per-unit factory overhead allocated to the commercial and residential motors under the multiple production department factory overhead rate method, using direct machine hours as the allocation base for each department. Residential 3.0 dmh 1.5 4.5 dmh per unit per unit
Transcribed Image Text:Single Plantwide and Multiple Production Department Factory Overhead Rate Methods and Product Cost Distortion Eclipse Motor Company manufactures two types of specialty electric motors, a commercial motor and a residential motor, through two production departments, Assembly and Testing. Presently, the company uses a single plantwide factory overhead rate for allocating factory overhead to the two products. However, management is considering using the multiple production department factory overhead rate method. The following factory overhead was budgeted for Eclipse: Assembly Department Testing Department Total Assembly Department Testing Department Total Direct machine hours were estimated as follows: Assembly Department Testing Department Total machine hours per unit $280,000 800,000 In addition, the direct machine hours (dmh) used to produce a unit of each product in each department were determined from engineering records, as follows: Commercial $ Residential $1,080,000 Commercial $ 4,000 hours 5,000 9,000 hours Residential a. Determine the per-unit factory overhead allocated to the commercial and residential motors under the single plantwide factory overhead rate method, using direct machine hours as the allocation base. per unit per unit Commercial 2.0 dmh 6.0 8.0 dmh b. Determine the per-unit factory overhead allocated to the commercial and residential motors under the multiple production department factory overhead rate method, using direct machine hours as the allocation base for each department. Residential 3.0 dmh 1.5 4.5 dmh per unit per unit
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