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Category > Business & Finance Posted 26 Apr 2017 My Price 3.00

Single Plantwide and Multiple Production

eBook

Single Plantwide and Multiple Production Department Factory Overhead Rate Methods and Product Cost Distortion

The management of Cobalt Engines 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 Cobalt:

Fabrication Department factory overhead

$629,000

  

Assembly Department factory overhead

259,000

  
 

Total

$888,000

  
       

Direct labor hours were estimated as follows:

Fabrication Department

3,700

hours

Assembly Department

3,700

  
 

Total

7,400

hours
       

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

Gasoline Engine

Diesel Engine

Fabrication Department

0.70

dlh

2.10

dlh

Assembly Department

2.30

  

0.90

  

Direct labor hours per unit

3.00

dlh

3.00

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:

$ per unit

Diesel engine:

$ per unit

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:

$ per unit

Diesel engine:

$ per unit

 



Answers

Alpha Geek
(8)
Status NEW Posted 26 Apr 2017 04:04 PM My Price 3.00

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Attachments

file 1493225600-1084546_1_636287642008032526_Plantwide-vs-Department-Overhead-Rates.xlsx preview (316 words )
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