Question

Activity-Based Costing: Factory Overhead Costs The total factory overhead for Bardot Marine Company is budgeted for the year at $1,066,500, divided into four activities: fabrication, $522,000; assembly, $182,000; setup, $195,750; and inspection, $166,750. Bardot Marine manufactures two types of boats: speedboats and bass boats. The activity-base usage quantities for each product by each activity are as follows: Fabrication Assembly Setup Inspection Speedboat 7,250 dlh 19,500 dlh 52 setups 91 inspections Bass boat 21,750 6,500 383 634 29,000 dlh 26,000 dlh 435 setups 725 inspections Each product is budgeted for 2,500 units of production for the year. a. Determine the activity rates for each activity. Fabrication $ per direct labor hour Assembly $ per direct labor hour Setup $ per setup Inspection $ per inspection b. Determine the activity-based factory overhead per unit for each product. Round to the nearest whole dollar. Speedboat $ per unit Bass boat $ per unit

Answer 1

Answer:

a. Activity rates for each activity

Fabrications   = $18/dlh

Assembly      = $7/dlh

Setup             = $450/setup

Inspection      = $230/inspection

b.  Activity-based factory overhead per unit for each product

Speed Boats = $124.532

Bass boats  = $302.068

Explanation:

Provided there are various activities as follows

Activity               Cost                Speed Boats        Bass boats          Total activity

Fabrications    $522,000        7,250 dlh             21,750 dlh            29,000 dlh

Assembly        $182,000         19,500 dlh            6,500 dlh             26,000 dlh

Setup               $195,750         52 setups            383 setups           435 setups

Inspection         $166,750        91 inspections     634 inspections    725 inspt.

a. Activity rates for each activity

Fabrications   =   $522,000/29,000 dlh = $18/dlh

Assembly     =     $182,000/26,000 dlh   = $7/dlh

Setup           =      $195,750/435 setups = $450/setup

Inspection    =      $166,750/725 inspections = $230/inspection

b.  Activity-based factory overhead per unit for each product

Activity              Speed Boats                                     Bass boats    

Fabrications       7,250 x $18 = $130,500             21,750 X $ 18 = $391,500

Assembly           19,500 X $7 = $136,500             6,500 X $7 = $45,500

Setup                  52 X $450 = $23,400                383 X $450 = $172,350

Inspection           91 X $230 = $20,930                 634 X $230 = $145,820

Total of both                    = $311,330                              = $755,170

Total units are 2,500 of each product

Cost p.u.  = $311,330/2,500 =$124.532    = $755,170/2,500 =$302.068

a. Activity rates for each activity

Fabrications   = $18/dlh

Assembly      = $7/dlh

Setup             = $450/setup

Inspection      = $230/inspection

b.  Activity-based factory overhead per unit for each product

Speed Boats = $124.532

Bass boats  = $302.068