Question: please help part 3 options are 1, 2, or 3 Single Plantwide and Multipie Producbon Department Factory Overhead Rate Methods and Product Cost Dutertion Eclipse

Single Plantwide and Multipie Producbon Department Factory Overhead Rate Methods and Product Cost Dutertion Eclipse Motor Company manufactures two types of speclaity electric motors, a commercial motor and a residential motor, through two production departments, Assemb 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: Direct machine hours were estimated as follows: 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: a. Determine the periunit 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 1 per unit Residential in periunit b. Determine the per-unit factory overhead allocated to the commerial and residential motors under the multiple production department factory overtead rate method, using direct machine hours as the allocation base for each department. Commercal 3 per unit. Residential 1 per unit c. Hecommend to management a product costing approach, based on your analyses in (a) and (b). 1. The management should consider multiple production department factory overhead rate methods, because this method calculates the cost more accurately and considers the fact that commercial products use more costy overheads than residential products. 2. The management should consider single plantwide factory overhead rate methods, because this method caiculates the cost more accurately and considers the fact that the gyerhesds are applied evenly based on the direct labor hours. 3. The management could consider either muitiple production department factory overhead rate method or the single planthide rate; as both these methods have the same effect on the final costs
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
