Question

The total factory overhead for Bardot Marine Company is budgeted for the year at $1,760,850, divided into four activities: fabrication, $858,000; assembly, $351,000; setup, $298,350; and inspection, $253,500. 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 9,750 dlh 29,250 dlh 70 setups 122 inspections
Bass boat 29,250 9,750 515 853
39,000 dlh 39,000 dlh 585 setups 975 inspections.
Each product is budgeted for 5,000 units of production for the year. 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:

Instructions are below.

Explanation:

Giving the following information:

Activity - Speedboat - Bass boat:

Fabrication= 9,750 + 29,250= 39,000 direct labor hours

Assembly= 29,250 + 9,750= 39,000 direct labor hours

Setup= 70 + 515= 585 setups

Inspection= 122 + 853= 975 inspections

Department costs:

Fabrication= 858,000

Assembly= 351,000

Setup= 298,350

Inspection= 253,500

Each product is budgeted for 5,000 units of production for the year.

First, we need to calculate the predetermined overhead rate for each activity:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Fabrication= 858,000/39,000= $22 per direct labor hour

Assembly= 351,000/39,000= $9 per direct labor hour

Setup= 298,350/585= $510 per setup

Inspection= 253,500/975= $260 per inspection

Now, we can allocate overhead to each product line:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Speedboats= 22*9,750 + 9*29,250 + 70*510 + 122*260= $545,170

Bass boat= 22*29,250 + 9*9,750 + 515*510 + 853*260= $1,215,680

Finally, overhead per unit:

Speedboats= 545,170/5,000= $109.034

Bass boat= 1,215,680/5,000= $243.136