Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
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Chapter 18, Problem 2PB
Multiple production department factory
The management of Spotted Cow Dairy Company, described in Problem 1B, now plans to use the multiple production department factory overhead rate method. The total factory overhead associated with each department is as follows:
Instructions
Determine the multiple production department factory overhead rates, using machine hours for the Blending Department and direct labor hours for the Packing Department.
Determine the product
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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:
$765,000
315,000
$1,080,000
Fabrication Department factory overhead
Assembly Department factory overhead
Total
Direct labor hours were estimated as follows:
Fabrication Department
Assembly Department
Total
In 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 Departments…
Chapter 18 Solutions
Financial And Managerial Accounting
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