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. OverheadDirectLabor Hours (dlh)Product A B Painting Dept.$374,640 11,200dlh 16dlh2dlhFinishing Dept.100,440 8,100 7 17 Totals$475,080 19,300dlh 23dlh19dlhThe overhead from both production departments allocated to each unit of Product A if Blue Ridge Marketing Inc. uses the multiple production department factory overhead rate method isa.$622.00 per unitb.$33.45 per unitc.$277.70 per unitd.$12.40 per unit

Solution under the departmental allocation method allocation rate for each department is calculated…

Answered: Blue Ridge Marketing Inc. manufactures…

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter18: Activity-based Costing

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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.	$374,640		11,200	dlh	16	dlh	2	dlh
Finishing Dept.	100,440		8,100		7		17
Totals	$475,080		19,300	dlh	23	dlh	19	dlh

The overhead from both production departments allocated to each unit of Product A if Blue Ridge Marketing Inc. uses the multiple production department factory overhead rate method is

a.$622.00 per unit

b.$33.45 per unit

c.$277.70 per unit

d.$12.40 per unit

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