ppNws Sports WeethAOL News The management of Firbt inousties

ppNws, Sports, WeethAOL- News The management of Firbt inousties nc manufactures gasolne and deset engines through two production departments, Fatrication and Acsembty producton department tactory ovehead rate method. The tollowing factory overhead was budgeted for Firebol needs accurale product cost information n overhead to the two prodacts However, management is considering the mulile 286,200.00 Total

Solution

Multiple production department factory overhead method:-

1) Overhead absorption rate of fabrication department,

= fabrication dept. factory overhead ÷ budgeted labour hours for fabrication dept

= 455000÷4550 = $100 per labour hour

2) Overhead absorption rate of assembly department,

= assembly dept. factory overhead ÷ budgeted labour hours for assembly dept.

= 286200 ÷ 5400 = $53 per labour hour