Single Plantwide and Multiple Production Department Factory Overhead Rate Methods and Product Cost Distortion Pineapple Motor Company...

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Single Plantwide and Multiple Production Department FactoryOverhead Rate Methods and Product Cost Distortion Pineapple MotorCompany manufactures two types of specialty electric motors, acommercial motor and a residential motor, through two productiondepartments, Assembly and Testing. Presently, the company uses asingle plantwide factory overhead rate for allocating factoryoverhead to the two products. However, management is consideringusing the multiple production department factory overhead ratemethod. The following factory overhead was budgeted for Pineapple:Assembly Department $220,000 Testing Department 809,600 Total$1,029,600 Direct machine hours were estimated as follows: AssemblyDepartment 4,400 hours Testing Department 8,800 Total 13,200 hoursIn addition, the direct machine hours (dmh) used to produce a unitof each product in each department were determined from engineeringrecords, as follows: Commercial Residential Assembly Department0.50 dmh 1.00 dmh Testing Department 1.00 2.00 Total machine hoursper unit 1.50 dmh 3.00 dmh a. Determine the per-unit factoryoverhead allocated to the Commercial and Residential motors underthe single plantwide factory overhead rate method, using directmachine hours as the allocation base. Commercial Motor $ per unitResidential Motor $ per unit b. Determine the per-unit factoryoverhead allocated to the Commercial and Residential motors underthe multiple production department factory overhead rate method,using direct machine hours as the allocation base for eachdepartment. Commercial Motor $ per unit Residential Motor $ perunit

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Answer aAs calculated abovePlant wide overhead rate 78Perunit factory overhead allocated to the Commercial motorunder the single plantwide factory overhead rate method usingdirect machine hours as the    See Answer
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