Determine the overhead from both production departments allocated to each unit of Product A if Blue Ridge Marketing Inc.uses a multiple department rate system.
A) $396.80 per unit
B) $425.60 per unit
C) $320.00 per unit
D) $214.40 per unit

Question

Determine the overhead from both production departments allocated to each unit of Product A if Blue Ridge Marketing Inc.uses a multiple department rate system. ​
A) $396.80 per unit
B) $425.60 per unit
C) $320.00 per unit
D) $214.40 per unit

Quizplus · Accepted Answer

To calculate the overhead allocated to each unit of Product A using a multiple department rate system, we need to sum up the overhead costs of both production departments and divide the total by the number of units produced in those departments.

Overhead from Department 1: 
$124,800 / 2,000 units = $62.40 per unit

Overhead from Department 2: 
$249,600 / 4,000 units = $62.40 per unit

Total overhead per unit of Product A: 
$62.40 + $363.20 = $425.60 per unit

Therefore, the best choice is B.

Determine the Overhead from Both Production Departments Allocated to Each