tSessionLocatoraassignment-ta faise on Mountan Con ? EasyKeys.com Benefits O Lan
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tSessionLocatoraassignment-ta faise on Mountan Con ? EasyKeys.com Benefits O Lane Mas Direct Operar D New Tab D New Member Logn D httpclestonner Calclator Single plontwide and Multi ate methods and product cost distortion Single Plantwide Method Multiple Production Department Method The management of Firebolit Industnes inc manufactures gacoline and desel engines through two production departments, Faonication and Assembly Management seads accurate product cost information in order to guide produdt stratogy Preserty, the company uses a single plantwide factory ovorhead rate for allocating factory overhead to the two products, However, management is considenng the mutiple production department tactory overhead rate method The fallowing factory overhead was budgeted for Frebot : Fabrication Department factory owerhead $455.000.00 285.200.00 5741,200.00 1Total PreviousExplanation / Answer
Calculation of Single plant overhead rate:
Single plant wide factory overhead rate
= Total factory overhead ÷ Total number of units of base for the the factory
***Here the base could be anything like machine hours or Labor hours etc.. depends on management decision.
In the question, Total factory overhead = $455,000 + $286,200 = $741,200
***However it seems like, the details regarding the base are absent in the question.
Plant wide factory overhead rate = $741,200 ÷ Total number of units of base for the the factory
***If management considers machine hours as a base, then you have to sum up the machine hours in the two departments (Fabrication & Assembly).
Calculation of Multiple or Departmental overhead rate:
If the management opts to consider Multiple overhead rate for absorbing budgeted overhead, we have to calculate overhead rate for each department.
Multiple overhead rate = Budgeted overhead expenses of department ÷ Corresponding base
***Here the base could be anything like machine hours or Labor hours etc.. depends on management decision.
Overhead head rate for Fabrication department
= Overhead expenses in Fabrication department ÷ Corresponding base
= $455,000 ÷ Corresponding base
If management considers machine hours as base to calculate overhead rate, then you have to simply take that number of machine hours related to the department to which we are calculating the overhead rate.
Overhead head rate for Assembly department
= Overhead expenses in Fabrication department ÷ Corresponding base
= $286,200 ÷ Corresponding base
If management considers labor hours as base to calculate overhead rate, then you have to simply take that number of labor hours related to the department to which we are calculating the overhead rate.
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