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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. $235,200 9,900 dlh 13 dlh 3 dlh
Finishing Dept. 73,600 7,300 6 15
Totals $308,800 17,200 dlh 19 dlh18 dlh
Determine the overhead in the Painting Department for each unit of Product B if Blue Ridge Marketing Inc. uses a multiple department rate system.
a. $53.86 per unit
b. $30.25 per unit
c. $71.28 per unit
d. $23.76 per unit
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