Question Content AreaBlue 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.$248,000 10,000dlh 16dlh4dlhFinishing Dept.72,000 10,000 4 16 Totals$320,000 20,000dlh 20dlh20dlhThe 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.$396.80 per unitb.$214.40 per unitc.$320.00 per unitd.$425.60 per unit

The question is based on the concept of Cost Accounting.

Answered: lue Ridge Marketing Inc. manufactures…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 3PA: Activity-based and department rate product costing and product cost distortions Black and Blue...

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Question Content Area

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.	$248,000		10,000	dlh	16	dlh	4	dlh
Finishing Dept.	72,000		10,000		4		16
Totals	$320,000		20,000	dlh	20	dlh	20	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.$396.80 per unit

b.$214.40 per unit

c.$320.00 per unit

d.$425.60 per unit

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