Question

Activity-Based Costing: Factory Overhead Costs The total factory overhead for Bardot Marine Company is budgeted for the year at $1,251,250, divided into four activities: fabrication, $595,000; assembly, $238,000; setup, $225,750; and inspection, $192,500. 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 8,750 dlh 25,500 dih 63 setups 109 inspections Bass boat 26,250 8,500 462 766 35,000 dlh 34,000 dlh 525 setups 875 inspections Each product is budgeted for 3,500 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 $ 09 b. Determine the activity-based factory overhead per unit for each product. Round to the nearest whole dollar. Speedboat $ per unit Bass boat S per unit

Answer 1

a.

Computation of Activity rates
Activity cost pool	Activity costs	Total activity usage	Activity Rate
Fabrication	$5,95,000	35000	$17	per DLH
Assembly	$2,38,000	34000	$7	per DLH
Setups	$2,25,750	525	$430	per setup
Inspecting	$1,92,500	875	$220	per inspection

b.

Speedboat
Activity	Activity base usage	Activity rate	Activity cost
Fabrication	8750	$17.00	$1,48,750
Assembly	25500	$7.00	$1,78,500
Setups	63	$430.00	$27,090
Inspecting	109	$220.00	$23,980
Total Activity Cost	$3,78,320
Number of units	3500
Activity cost per unit	$108

Bass Boat
Activity	Activity base usage	Activity rate	Activity cost
Fabrication	26250	$17.00	$4,46,250
Assembly	8500	$7.00	$59,500
Setups	462	$430.00	$1,98,660
Inspecting	766	$220.00	$1,68,520
Total Activity Cost	$8,72,930
Number of units	3500
Activity cost per unit	$249