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Question - Blue Ridge 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. The following table presents information about estimated overhead and direct labor hours.
Overhead Direct Labor Hours (dlh) Product A B
Painting Dept. $248,000 10,000 dlh 16 dlh 4 dlh
Finishing Dept. 72,000 10,000 4 16
Totals $320,00020,000 dlh 20 dlh 20 dlh
Determine the overhead in the Finishing Department for each unit of Product A if Blue Ridge Marketing Inc. uses a multiple department rate system.
a. $99.20 per unit
b. $28.80 per unit
c. $64.00 per unit
d. $49.60 per unit
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