Answered: Blue Ridge Marketing Inc. manufactures…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 6E: Eclipse Motor Company manufactures two types of specialty electric motors, a commercial motor and a...

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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.	$231,800		10,900	dlh	15	dlh	7	dlh
Finishing Dept.	76,800		6,300		2		18
Totals	$308,600		17,200	dlh	17	dlh	25	dlh

The factory overhead allocated per unit of Product B in the Painting Department if Blue Ridge Marketing Inc. uses the multiple production department factory overhead rate method is

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.
Painting Dept.
Finishing Dept.
Totals
Overhead
Oa. $125.59 per unit
Ob. $21.27 per unit
Oc. $148.89 per unit
Od. $85.33 per unit
$231,800
76,800
$308,600
Direct
Labor Hours (dlh)
Product
A
15 dlh
2
10,900 dlh
6,300
17,200 dlh
The factory overhead allocated per unit of Product B in the Painting Department if Blue Ridge Marketing Inc. uses the multiple production department factory overhead rate method
is
B
17 dlh
7 dlh
18
25 dlh

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