FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Pineapple Motor Company manufactures two types of specialty electric motors, a commercial motor and a residential motor, through two production departments, Assembly and Testing. Presently, the company uses a single plantwide factory overhead rate for allocating factory overhead to the two products. However, management is considering using the multiple production department factory overhead rate method. The following factory overhead was budgeted for Pineapple:

Assembly Department $188,600  
Testing Department 697,000  
  Total $885,600  

Direct machine hours were estimated as follows:

Assembly Department 4,100 hours
Testing Department 8,200  
  Total 12,300 hours

In addition, the direct machine hours (dmh) used to produce a unit of each product in each department were determined from engineering records, as follows:

  Commercial Residential
Assembly Department 0.50 dmh 1.00 dmh
Testing Department 1.00   2.00  
Total machine hours per unit 1.50 dmh 3.00 dmh

a.  Determine the per-unit factory overhead allocated to the Commercial and Residential motors under the single plantwide factory overhead rate method, using direct machine hours as the allocation base.

Commercial Motor $ per unit
Residential Motor $ per unit

b.  Determine the per-unit factory overhead allocated to the Commercial and Residential motors under the multiple production department factory overhead rate method, using direct machine hours as the allocation base for each department.

Commercial Motor $ per unit
Residential Motor $ per unit
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