Answer:
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
Per Unit Overhead Cost for Gasoline engine;
= No. of Direct Labor Hours per Unit * Overhead Rate per Hour
Overhead Rate per hour = Total overhead cost/ Total direct labor hours
= 800,000/10,000
= $80 per hour
Per Unit Overhead Cost for Gasoline engine;
= 5 * 80
= $400
Per Unit Overhead Cost for Diesel engine;
= No. of Direct Labor Hours per Unit * Overhead Rate per Hour
= 5 * 80
= $400
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.
Gasoline Engine
Per Unit Overhead cost for Gasoline engine under multiple production department factory overhead rate method;
= Overhead Cost under Fabrication Department + Overhead Cost in Assembly Department
Overhead Cost under Fabrication Department = Overhead Rate for Fabrication Department * No. of Direct Labor Hours under Fabrication Department
= (Overhead cost for fab. depart. / No. of direct labor hours for fab. depart.) * No. of Direct Labor Hours engine is in Fabrication Department
= (550,000/5,000) * 3
= $330
Overhead Cost under Assembly Department = Overhead Rate for Assembly Department * No. of Direct Labor Hours in Assembly Department
= (Overhead cost for assembly. depart. / No. of direct labor hours for fab. depart.) * No. of Direct Labor Hours engine is in assembly Department..
= (250,000/5,000) * 2
= $100
Per Unit Overhead cost for Gasoline engine under multiple production department factory overhead rate method = 330 + 100
= $430
Diesel Engine
Per Unit Overhead cost for Diesel engine under multiple production department factory overhead rate method;
= Overhead Cost under Fabrication Department + Overhead Cost in Assembly Department
Overhead Cost under Fabrication Department = Overhead Rate for Fabrication Department * No. of Direct Labor Hours under Fabrication Department
= (Overhead cost for fab. depart. / No. of direct labor hours for fab. depart.) * No. of Direct Labor Hours engine is in Fabrication Department
= (550,000/5,000) * 2
= $220
Overhead Cost under Assembly Department = Overhead Rate for Assembly Department * No. of Direct Labor Hours in Assembly Department
= (Overhead cost for assembly. depart. / No. of direct labor hours for fab. depart.) * No. of Direct Labor Hours engine is in assembly Department..
= (250,000/5,000) * 3
= $150
Per Unit Overhead cost for Gasoline engine under multiple production department factory overhead rate method = 330 + 100
= $370
