Question

The total factory overhead for Bardot Marine Company is budgeted for the year at $820,850, divided into four activities: fabrication, $441,000; assembly, $152,000; setup, $122,850; and inspection, $105,000. 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 5,250 dlh 14,250 dlh 38 setups 66 inspections
Bass boat 15,750 4,750 277 459
21,000 dlh 19,000 dlh 315 setups 525 inspect

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

a. Determine the activity rates for each activity.
b. Determine the activity-based factory overhead per unit for each product.

Answer 1

Answer:

Bardot Marine Company

a. Activity rates for each activity:

Fabrication = $21

Assembly = $8

Setup= $390

Inspection = $200

b. The activity-based factory overhead per unit for each product:

Speedboat = $40.45

Bass Boat = $113.72

Explanation:

a) Data and Calculations:

Budgeted total factory overhead = $820,850

Fabrication,    $441,000

Assembly,      $152,000

Setup,            $122,850

Inspection,    $105,000

Total             $820,850

Activity-base Usage Quantities:

                                   Speedboat      Bass Boat           Total

Fabrication                 5,250 dlh        15,750 dlh          21,000

Assembly                  14,250 dlh          4,750 dlh         19,000

Setup                              38 setups        277 setups         315

Inspections                    66                    459                    525

Budgeted units of

production                 5,000                5,000              10,000

a) Activity rates for each activity:

                         Costs        Usage     Rates

Fabrication,    $441,000    21,000     $21

Assembly,      $152,000    19,000     $8

Setup,            $122,850          315     $390

Inspection,    $105,000         525     $200

b)                                     Speedboat                        Bass Boat  

Fabrication                    $110,250 ($21*5,250)      $330,750 ($21*15,750)

Assembly                         114,000 ($8*14,250)           38,000 ($8*4,750)

Setup                                 14,820 ($390*38)            108,030 ($390*277)

Inspections                       13,200 ($200*66)              91,800 ($200*459)

Total overhead costs $252,270                           $568,580

Budgeted units of

production                        5,000                                 5,000

Per unit overhead         $40.45                                 $113.72