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 and overhead is allocated on the basis of those rate calculation of allocation rate total overhead cost departmental labor hours allocation rate painting department 374640 11200 33.45 finishing department 100440 8100 12.4 Total overhead cost allocation to A total overhead cost departmental labor hours allocation rate labor hours for product A overhead allocated to A painting department 374640 11200 33.45 16 535.2 finishing department 100440 8100 12.4 7 86.8 Total overhead cost 622conclusion hence correct answer is option a.$622.00 per unit

Answered: Blue Ridge Marketing Inc. manufactures…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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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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