53. Blue Ridge Marketing Inc. manufactures two products, A and B. Presently, the
ID: 2430669 • Letter: 5
Question
53. 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.
$240,700
9,000
dlh
14
dlh
5
dlh
Finishing Dept.
71,300
7,400
4
17
Totals
$312,000
16,400
dlh
18
dlh
22
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.
$133.70 per unit
$48.18 per unit
$26.74 per unit
$95.12 per unit
Overhead
Direct
Labor Hours (dlh)
Product
A
B
Painting Dept.
$240,700
9,000
dlh
14
dlh
5
dlh
Finishing Dept.
71,300
7,400
4
17
Totals
$312,000
16,400
dlh
18
dlh
22
dlh
Explanation / Answer
Overhead DLH overhead rate per DLH D Product B DLH Overhead allocated D*B Painting Dept $240,700 9000 $26.74 5 $133.70 Finishing Dept 71300 7400 $9.64 7 $67.45 Painting dept-Product B $133.70 Option A $133.70 If any doubt please comment. If satisfied you can rate
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