Condelezza Co. manufactures two products, A and B, in two production departments, Assembly and Finishing. Condelezza Co. expects to produce 10,000 units of Product A and 20,000 units of Product B in the coming year. Budgeted factory overhead costs for the coming year are:
The machine hours expected to be used in the coming year are as follows:
(a) Compute the plantwide factory overhead rate.
Compute the production department factory overhead rates.
(b) Compute the factory overhead per unit for each product using (1) the single plantwide rate and (2) production department factory overhead rates.
(c) Which method is better (plantwide or department)? Why?

Question

Condelezza Co. manufactures two products, A and B, in two production departments, Assembly and Finishing. Condelezza Co. expects to produce 10,000 units of Product A and 20,000 units of Product B in the coming year. Budgeted factory overhead costs for the coming year are:  
The machine hours expected to be used in the coming year are as follows:  
(a) Compute the plantwide factory overhead rate. 
Compute the production department factory overhead rates. 
(b) Compute the factory overhead per unit for each product using (1) the single plantwide rate and (2) production department factory overhead rates. 
(c)      Which method is better (plantwide or department)?  Why?

Quizplus · Accepted Answer

The Answer of Condelezza Co. manufactures two products, A and B, in two production departments, Assembly and Finishing. Condelezza Co. expects to produce 10,000 units of Product A and 20,000 units of Product B in the coming year. Budgeted factory overhead costs for the coming year are:  
The machine hours expected to be used in the coming year are as follows:  
(a) Compute the plantwide factory overhead rate. 
Compute the production department factory overhead rates. 
(b) Compute the factory overhead per unit for each product using (1) the single plantwide rate and (2) production department factory overhead rates. 
(c)      Which method is better (plantwide or department)?  Why?