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Single plantwide and multiple production department factory overhead rate methods and product cost distortion In...

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Accounting

image Single plantwide and multiple production department factory overhead rate methods and product cost distortion 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: Gasoline engine : per unit Diesel engine $ per unit Gasoline engine per unit Diesel engine per unit c. Recommend to management a product costing approach, based on your analyses in (a) and (b). Management should select the factory overhead rate method of allocating overhead costs. The factory overhead rate method indicates that both products have the same factory overhead per unit. Each product uses the direct labor hours . Thus, the rate method avoids the cost distortions by accounting for the overhead

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