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 LaborHours (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 |
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Determine the overhead from both production departments allocated to each unit of Product A if the company uses a multiple department rate system.