Adirondak Marketing Inc. manufactures two products, A and B. Presently, the comp

Question

Adirondak 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. From the following information, calculate the overhead rate per unit for Product A in painting department. Round to the nearest cent in the final calculation.

Select the correct answer.

Overhead Total
Direct
Labor Hours DLH per Product A B Painting Dept. $247,698 11,199 3 11 Finishing Dept. 81,062 10,070 4 4     Totals $328,760 21,269 7 15

Explanation / Answer

Overhead rate in painting department per DLH is 247698/11199= $22.117

Hence the overhead rate per unit for Product A in painting department= 3DLH* 22.117=$66.35

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