Blue Ridge Marketing Inc. manufactures two products, A and B. Presently, the com

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. Determine the overhead rate in the Painting Department for each unit of Product B if the company uses a multiple department rate system. $16.00 per dlh $24.80 per dlh $12.40 per dlh $7.20 per dlh

Explanation / Answer

The overhead rate =Total overhead /total Labour hours

                           =320,000/20,000

                           =$16 per dlh

Therfore option A is correct.

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