Question

Activity-Based Costing: Factory Overhead Costs

The total factory overhead for Bardot Marine Company is budgeted for the year at $909,050, divided into four activities: fabrication, $396,000; assembly, $155,000; setup, $193,050; and inspection, $165,000. 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       8,250       dlh       23,250       dlh       59       setups       103       inspections  
Bass boat       24,750              7,750              436              722         
        33,000       dlh       31,000       dlh       495       setups       825       inspections  

Each product is budgeted for 6,500 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

Ans: Bardot Marine Company

Manufacture Two Types of Boats

Speed Boats

Bass Boats

Each product is budgeted for 6,500 units of production for the year

a) Statement of Rate Per Activity

Activity	Basis	Number of Activities	Cost ($)	Cost per Activity ($)= Cost/Number of Activities
Fabrication	Direct labor hour	33,000	396,000	12
Assembly	Direct labor hour	31,000	155,000	5
Setup	Number of Set ups	495	193,050	390
Inspection	Number of Inspection	825	165,000	200

b) Statement of activity-based factory overhead per unit for each product

Particulars	Speed Boat			Bass Boat
	Number of Activity	Rate per Activity ($)	Cost ($)	Number of Activity	Rate per Activity ($)	Cost ($)
Fabrication	8,250	12	99,000	24,750	12	297,000
Assembly	23,250	5	116,250	7,750	5	38,750
Setup	59	390	23,010	436	390	170,040
Inspection	103	200	20,600	722	200	144,400
Total			258,860			650,190
Budgeted Units			6,500			6,500
Overhead Cost per unit			40			100