Activity-Based Costing: Factory Overhead Costs
The total factory overhead for Bardot Marine Company is budgeted for the year at $762,000, divided into four activities: fabrication, $312,000; assembly, $120,000; setup, $180,000; and inspection, $150,000. 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 | 6,000 | dlh | 18,000 | dlh | 43 | setups | 75 | inspections |
Bass boat | 18,000 | 6,000 | 317 | 525 | ||||
24,000 | dlh | 24,000 | dlh | 360 | setups | 600 | inspections |
Each product is budgeted for 4,000 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 |
Requirement a
Fabrication | $ 13.00 | Per labor hour |
Assembly | $ 5.00 | Per labor hour |
Setup | $ 500.00 | Per setup |
Inspection | $ 250.00 | Per inspection |
Requirement b
Activity Cost per unit | |
Speedboat | $ 52.06 |
Bass Boat | $ 138.44 |
Working
Calculation of Activity rates | |||||
Activity Cost Pool | Activity driver | Overhead Cost (A) | Expected Activity (B) | Activity rate (A/B) | |
Fabrication | Number of labor hour | $ 312,000.00 | 24000 | $ 13.00 | Per labor hour |
Assembly | Number of labor hour | $ 120,000.00 | 24000 | $ 5.00 | Per labor hour |
Setup | Number of setup | $ 180,000.00 | 360 | $ 500.00 | Per setup |
Inspection | Number of inspection | $ 150,000.00 | 600 | $ 250.00 | Per inspection |
.
Cost assigned to Speedboat | |||
Activity name | Activity Rates | Activity | ABC Cost |
(A) | (B) | (A x B) | |
Fabrication | $ 13.00 | 6000 | $ 78,000.00 |
Assembly | $ 5.00 | 18000 | $ 90,000.00 |
Setup | $ 500.00 | 43 | $ 21,500.00 |
Inspection | $ 250.00 | 75 | $ 18,750.00 |
Total Overheads assigned | $ 208,250.00 | ||
Production | 4,000.00 | ||
Overhead cost per unit | $ 52.06 |
.
Cost assigned to Bass Boat | |||
Activity name | Activity Rates | Activity | ABC Cost |
(A) | (B) | (A x B) | |
Fabrication | $ 13.00 | 18000 | $ 234,000.00 |
Assembly | $ 5.00 | 6000 | $ 30,000.00 |
Setup | $ 500.00 | 317 | $ 158,500.00 |
Inspection | $ 250.00 | 525 | $ 131,250.00 |
Total Overheads assigned | $ 553,750.00 | ||
Production | 4,000.00 | ||
Overhead cost per unit | $ 138.44 |
Activity-Based Costing: Factory Overhead Costs The total factory overhead for Bardot Marine Company is budgeted for...
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