Question

3. Determine the activity rates, assuming that the indirect labor is associated with activities rather than with the production departments. Round per unit amounts to the nearest whole cent. Activity Activity Rate Production Control $ 474 per prod. run Materials Handling $ 36 per move Cutting Department $ 26 per dih Finishing Department 32 per dih 4. Determine the total and per-unit cost assigned to each product under activity-based costing. Round the per unit amounts to the nearest whole cent. Product Total Activity Cost Activity Cost Per Unit Snowboards 551,820 $ 303,180 x Skis 91.97 X 50.53 5. Comment on the difference in the per-unit overhead allocated to each product under the multiple production department factory overhead rate and activity-based costing methods. The activity-based overhead allocation reveals that snowboards consume more factory overhead on a per-unit basis than do skis ✓ The multiple production department factory overhead rate X method does not show this because all factory overhead is assumed to be proportional to direct labor hours. The activity-based X method separately accounts for the production control and materials handling activity costs. Snowboards have more production control and materials handling activities than do skis. This is because snowboards are made in smaller lots, representing a wide variety of styles. Thus, snowboards have higher activity costs per unit than skis.

Answer 1

4
	Product	Total Activity Cost	Activity Cost Per Unit
	Snowboards	$551,820	$91.97	($551,820/6,000)
	Skis	$303,180	$50.53	($303,180/6,000)
5	multiple production department factory overhead rate
	activity-based