Single PlantwideandMultiple Production Department Factory Overhead Rate Methodsand Product Cost Distortion Eclipse Motor Company manufactures two types
Question:
Single Plantwide and Multiple Production Department Factory Overhead Rate Methods and Product Cost Distortion
Eclipse 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 Eclipse:
Assembly Department $280,000
Testing Department $800,000
Total $1,080,000
Direct machine hours were estimated as follows:
Assembly Department 4,000 hours
Testing Department 5,000 hours
Total 9,000 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 2.0 dmh 3.0 dmh
Testing Department 6.0 1.5
Total machine hours per unit 8.0 dmh 4.5 dmh
Questions.
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 $________ per unit
Residential $________ 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 $_________ per unit
Residential $__________ per unit
Expert Answer:
Eclipse Motor Company Allocating Factory Overhead a Single Plantwide Rate Calculate the single plant... View the full answer
