Question

The management of Firebolt Industries Inc. manufactures gasoline and diesel engines through two production departments, Fabrication and Assembly. Management needs accurate product cost information in order to guide product strategy. Presently, the company uses a single plantwide factory overhead rate for allocating factory overhead to the two products. However, management is considering the multiple production department factory overhead rate method. The following factory overhead was budgeted for Firebolt:

1	Fabrication Department factory overhead	$561,600.00
2	Assembly Department factory overhead	241,500.00
3	Total	$803,100.00

Direct labor hours were estimated as follows:

Fabrication Department	4,800	hours
Assembly Department	5,250
Total	10,050	hours

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

Production Departments	Gasoline Engine	Diesel Engine
Fabrication Department	3.1 dlh	1.8 dlh
Assembly Department	1.8	3.1
Direct labor hours per unit	4.9 dlh	4.9 dlh

a. Determine the per-unit factory overhead allocated to the gasoline and diesel engines under the single plantwide factory overhead rate method, using direct labor hours as the activity base . If required, round all per-direct labor hours and per-unit answers to the nearest cent.

Gasoline engine	$391.56 per unit
Diesel engine	$391.56 per unit

b. Determine the per-unit factory overhead allocated to the gasoline and diesel engines under the multiple production department factory overhead rate method, using direct labor hours as the activity base for each department. If required, round all per-unit answers to the nearest cent.

Gasoline engine	__________ per unit
Diesel engine	__________ per unit

Points:

0 / 2

Department rate = Department Overhead ÷ Labor hours

Product allocation = Labor hours per product x Department rate; Add both department allocations together to obtain a total per product.

Part a is solved, I'm stuck on part b.

Answer 1

Single blanket Rate Total Overhead Total Labour bours 803,100 TO050 =$79.91 per hour Ouerhead Rate per unit. Gasline engere engene 79.91 x 4.9 dih s 391.56 * 391.56 79.91 x 4.9 d1h Diesel Departmental ourhead rate Fabrication overhead Fabrication. Faboication bours 561600 4800 hour =$117 per ASsem bly Hssembly. hous ouerhead Assembly 241500 5250 $46 per hour.

Diesel Prooduction department Gasoline engene engine $117x3-1dih 117 x 1.8 dlh 362 7 Fabrication 210.8 $46x1.8 d1h $46x3.1 dlh 82.8 Assembly 142.6 $ 353.2 per unit departmentalH45:5. fautory oueshead rate

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