Blue Ridge Marketing Inc. manufactures two products, A and B. Presently, the company uses a single...

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 Using a single plantwide rate, determine the overhead rate per unit for Blue Ridge Marketing Inc.'s Product B. a.$496.00 b.$320.00 c.$640.00 d.$144.00

Expert Solution

Answer- Single plantwide Overhead rate
             = Total overhead Costs / Total direct labour hours
             =   $ 320,000 / 20,000 DLH
             =    $ 16 per DLH

Overhead rate per unit for Blue Ridge Marketing Inc.'s Product
                    = Single plantwide Overhead rate x hours Allocated to B
                    =   $ 16 x 20 DLH
                    =    $ 320

Hence, the correct option is b.$320.00

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ekkarill92 answered 1 year ago

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