Question

Adirondack 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. Overhead Total Direct Labor Hours DLH per Product A B Painting Dept. $255,200 10,100 3 11 Finishing Dept. 65,700 11,200 6 7 Totals $320,900 21,300 9 18 Using a single plantwide rate, the factory overhead allocated per unit of Product A in the Painting Department is a.$15.07 per unit b.$75.80 per unit c.$45.21 per unit d.$682.22 per unit

Answer 1

Answer:

a.$15.07 per unit

Explanation:

Using a single plantwide overhead rate based on direct labor hours each product is assigned $15.07 of overhead per unit.

Plantwide overhead rate = Total Budgeted Overhead/ Total Budgeted Direct Labor Hours

Plantwide overhead rate =  $320,900/ 21,300= $ 15.065= $ 15.07

                     Overhead    Total Direct Labor Hours DLH per Product A B

Painting Dept.            $255,200           10,100                 3       11

Finishing Dept.         65,700                  11,200                     6       7

Totals                       $320,900              21,300                   9      1