Question

ACCT 2123 - Managerial Accounting Chapter 18 Additional Exercises 1) Single Plantwide Factory Overhead Rate The total factory overhead for Bardot Marine Company is budgeted for the year at $600,000 Bardot Marine manufactures two types of boats speedboats and bass boats. The speedboat and bass boat each require 12 direct labor hours for manufacture. Each product is budgeted for 250 units of production for the year. a. Determine the total number of budgeted direct labor hours for the year b. Determine the single plantwide factory overhead rate c. Determine the factory overhead allocated per unit for each product using the single plantwide factory overhead rate 2) Multiple Production Department Factory Overhead Rates The total factory overhead for Bardot Marine Company is budgeted for the year at $600,000 divided into two departments: Fabrication, $420,000, and Assembly, $180,000. Bardot Marine manufactures two types of boats: speedboats and bass boats. The speedboats require 8 direct labor hours in Fabrication and 4 direct labor hours in Assembly. The bass boats require 4 direct labor hours in Fabrication and 8 direct labor hours in Assembly. Each product is budgeted for 250 units of production for the year. a. Determine the total number of budgeted direct labor hours for the year in each department b. Determine the departmental factory overhead rates for both departments c. Determine the factory overhead allocated per unit for each product using the department factory overhead allocation rates 3) Activity-Based Costing: Factory Overhead Costs The total factory overhead for Bardot Marine Company is budgeted for the year at $600.000, divided into four activities: fabrication, $204,000, assembly, $105,000, setup, $156,000, and inspection, $135,000. 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: Speedboat Bass boat Fabrication 2,000 dih 1,000 3,000 dih Assembly Setup 1,000 dih 300 setups 2,000 100 3,000 dih 400 setups Inspection 1,100 inspections 400 1,500 inspections Each product is budgeted for 250 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

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Bardot Marine Company
Answer 1 a
Budgeted Direct Labor Hours	Speed Boat	Bass Boat	Total	Note
Direct Labor Hour per unit	12.00	12.00		A
Number of units	250.00	250.00		B
Budgeted Direct Labor Hours	3,000.00	3,000.00	6,000.00	C=A*B

Answer 1 b
Calculation of single plant wide OH Rate	Total	Note
Budgeted Direct Labor Hours	6,000.00	See C
Budgeted Overhead costs	600,000.00	D
Predetermined OH Rate	100.00	E=D/C

Answer 1 c
Overhead allocated to each unit	Speed Boat	Bass Boat	Note
Direct Labor Hour per unit	12.00	12.00	See A
Predetermined OH Rate	100.00	100.00	See E
Overhead allocated to each unit	1,200.00	1,200.00	F=A*E

Answer 2 a
Budgeted Direct Labor Hours- Fabricating	Speed Boat	Bass Boat	Total	Note
Direct Labor Hour per unit	8.00	4.00		G
Number of units	250.00	250.00		See B
Budgeted Direct Labor Hours- Fabricating	2,000.00	1,000.00	3,000.00	H=G*B
Budgeted Direct Labor Hours- Assembly	Speed Boat	Bass Boat	Total	Note
Direct Labor Hour per unit	4.00	8.00		I
Number of units	250.00	250.00		See B
Budgeted Direct Labor Hours- Assembly	1,000.00	2,000.00	3,000.00	J=I*B
Total Budgeted Direct Labor Hours	3,000.00	3,000.00	6,000.00	K=H+J
Answer 2 b
Department wide OH Rate	Fabricating	Assembly		Note
Machine Hours/ Labor Hours	3,000.00	3,000.00	6,000.00	See K
Total Overhead costs	420,000.00	180,000.00	600,000.00	L
Department wide OH Rate	140.00	60.00		M=K/L
Answer 2 c
Overhead allocated to Speed Boat	Fabricating	Assembly	Total	Note
Direct Labor Hour per unit	8.00	4.00	12.00	N
Department wide OH Rate	140.00	60.00		See M
Overhead allocated to Speed Boat	1,120.00	240.00	1,360.00	O=M*N
Overhead allocated to Bass Boat	Fabricating	Assembly	Total	Note
Direct Labor Hour per unit	4.00	8.00	12.00	P
Department wide OH Rate	140.00	60.00		See M
Overhead allocated to Bass Boat	560.00	480.00	1,040.00	Q=P*M

Answer 3 a
Calculation of ABC rates for overhead		R	S	T=R/S
Activity cost pool	Cost Driver	Cost	Cost Driver	ABC rates
Fabricating	Direct Labor Hours	204,000.00	3,000.00	68.00
Assembly	Direct Labor Hours	105,000.00	3,000.00	35.00
Setup	Number of setups	156,000.00	400.00	390.00
Inspection	Number of Inspections	135,000.00	1,500.00	90.00
Total Cost assigned		600,000.00

Answer 3 b		See T	U	V=T*U	W	X=T*W
Allocation table			Speed Boat	Bass Boat
Activity cost pool	Cost Driver	ABC Rates	Activity used	Cost assigned	Activity used	Cost assigned	Note
Fabricating	Direct Labor Hours	68.00	2,000.00	136,000.00	1,000.00	68,000.00
Assembly	Direct Labor Hours	35.00	1,000.00	35,000.00	2,000.00	70,000.00
Setup	Number of setups	390.00	300.00	117,000.00	100.00	39,000.00
Inspection	Number of Inspections	90.00	1,100.00	99,000.00	400.00	36,000.00
Total Cost assigned				387,000.00		213,000.00	X
Units produced				250.00		250.00	See B
Overhead allocated to each unit				1,548.00		852.00	Y=X/B