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Question - Blue Ridge Marketing Inc. manufacturing two products, A and B. Presently, the company uses a single plant-wide 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.
$606,900
15,000 dlh
13 dlh
3 dlh
Finishing Dept.
71,442
8,100
5
16
Totals
$678,342
23,100 dlh
18 dlh
19 dlh
Determine the overhead from both production departments allocated to each unit of Products B if Blue Ridge Marketing Inc. uses a multiple department rate system.
a. $8.82 per unit
b. $570.08 per unit
c. $40.46 per unit
d. $262.50 per unit
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