(Solved): The management of Nova Industries Inc. manufactures gasoline and diesel engines through two product ...

The management of Nova Industries Inc. manufactures gasoline and diesel engines through two production departments, Fabrication and Assembly. Management needs accurate product cost information in order to guide product strategy. Presently, the company uses a single plantwide factory. overhead rate for allocating factory overhead to the twq products. However, management is considering the multiple production department factory overhead rate method. The following factory overhead was budgeted for Nova: In addition, the direct labor hours (dil)) used to produce a unit of each product in each department were determined from engineering records, as follows: a. Determine the per-unit factory overhead allocated to the gasoline and diesel engines under the single planitwide factory overhead rate method, using= direct labor hours as the activity basef. 1. Determine the percunit 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, c. Recommend to management a product costing approach, based on your analyses in (a) and (b). Marabernent should select the factory overhead cate method of allocating overhead costs. The factory overhead rate method inisicates that both products have the same factory overhead per unit. Each prodoct uses the direct labor hours Thus, the rate method syolds the cost distortions by accounting for the overhead