Question

Instructions 1. Determine the multiple production department factory overhead rates, using direct labor hours for the Stamping Department and machine hours for the Plating Department. 2. Determine the product factory overhead costs, using the multiple production department rates in (1) PR 4-3A Activity-based and department rate product costing and Obj. 3,4 product cost distortions ards, Black and Blue Sports Inc. manufactures two products: snowboards and skis. The factory over- d $65 head incurred is as follows: Indirect labor Cutting Department Finishing Department Total $507,000 156,000 192,000 $855,000 EMPLATE

Answer 1

1	MULTIPLE PRODUCTION DEPARTMENT RATE METHOD
		OVERHEADS COST	BASE - DIRECT LABOR HOURS	RATE PER DLHS
	CUTTING DEPARTMENT	315000	6000	52.5
	FINISHING DEPARTMENT	540000	6000	90
	TOTAL	855000
2		SNOWBOARDS		SKIS
	DEPARTMENTS	DLHS	ALLOCATION	DLHS	ALLOCATION
	CUTTING DEPT.	4000	210000	2000	180000
	FINISHING DEPT.	2000	105000	4000	360000
			315000		540000
3	ACTIVITY RATES
	ACTIVITY	OVERHEADS	ACTIVITY DRIVER		RATE PER DRIVER
	PRODUCTION CONTROL	237000	PRODUCTION RUNS	500	474
	MATERIALS HANDLLING	270000	NO. OF MOVES	7500	36
	CUTTING DEPT	156000	DLHS	6000	26
	FINISHING DEPT	192000	DLHS	6000	32

4	OVERHEADS COST ALLOCATION UNDER ABC
			SNOWBOARDS		SKIS		TOTAL COST ALLOCATED
	ACTIVITY	RATE	DRIVER UTILISED	ALLOCATED COST	DRIVER UTILISED	ALLOCATED COST
	PRODUCTION CONTROL	474	430	203820	70	33180	237000
	MATERIALS HANDLLING	36	5000	180000	2500	90000	270000
	CUTTING DEPT	26	4000	104000	2000	52000	156000
	FINISHING DEPT	32	2000	64000	4000	128000	192000
				551820		303180	855000
5	DIFFERENCE	SNOWBOARDS	SKIS
	MULTIPLE DEPT RATE	315000	540000
	ABC	551820	303180
	Difference	-236820	236820