Question

Calculator 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. А Direct Labor Product Overhead Hours dih) B $248,000 Painting Dept. 10,000 din 16 dih 4 dih Finishing Dept 72.000 10,000 4 16 Totals $320,000 20,000 dih 20 din 20 dih Using a single plantwide rate, determine the overhead rate per unit for Blue Ridge Marketing Inc.'s Product B. Oa. $496.00 Ob. $640.00 Oc. $320.00 Od. $144.00 く Ma

Answer 1

Answer: c.$320.00

Calculations:

i. Plantwide rate

= Total estimated overhead ÷ Total direct estimated labor hours

= $320,000 ÷ 20,000

= $16.00 per direct labor hour

ii. Overhead rate per unit of Product B

= Direct labor hours per unit x Plantwide rate

= 20 direct labor hours x $16.00

= $320.00 per unit

Thus, Option c is correct and remaining options are incorrect.