Question

1. 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: 1 Assembly Department $420,000.00 2 Testing Department 1,200,000.00 Direct machine hours were estimated as follows: Assembly Department 3,000 hours Testing Department 6,000 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 1.6 dmh 0.8 dmh Testing Department 3.2 1.6 Total machine hours per unit 4.8 dmh 2.4 dmh

Required: 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.

I already firgured out a: commercial is $864 per unit, Residential is $432 per unit

I need help with b: the same question answered using Multiple production department method: commercial is $? , residential is $?

Answer 1

	Assembly Department	Testing Department	Total
Commercial	1.6	3.2	4.8
Residential	0.8	1.6	2.4
Total machine hours per unit	2.4	4.8
Departmental overhead	420,000	1,200,000
Divided by: Direct machine hours	3,000	6,000
Departmental overhead rate per Machine hours	140	200
Commercial	1.6	3.2
Multiply by: Departmental overhead rate per Machine hours	140	200
Overhead allocated	224	640	864
Residential	0.8	1.6
Multiply by: Departmental overhead rate per Machine hours	140	200
Overhead allocated	112	320	432
Overhead allocated per unit Using Multiple production department method
Commercial			864
Residential			432
Why Both Method Give Same Answer?
Logic: Because of Both Product used Same Proportionate Machine Hours In Both Department.