Question

Activity-Based Costing: Factory Overhead Costs

The total factory overhead for Bardot Marine Company is budgeted for the year at $925,250, divided into four activity pools: fabrication,, $459,000; assembly, $203,000; setup, $141,750; and inspection, $121,500. 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	6,750	dlh	21,750	dlh	49	setups	84	inspections
Bass boat	20,250		7,250		356		591
	27,000	dlh	29,000	dlh	405	setups	675	inspections

Each product is budgeted for 2,500 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

a
Fabrication	17	per direct labor hour	=459000/27000
Assembly	7	per direct labor hour	=203000/29000
Setup	350	per setup	=141750/405
Inspection	180	per inspection	=121500/675
b
		Speedboat		Bassboat
	Activity rate	Activity	Overhead allocated	Activity	Overhead allocated
Fabrication	17	6750	114750	20250	344250
Assembly	7	21750	152250	7250	50750
Setup	350	49	17150	356	124600
Inspection	180	84	15120	591	106380
		Total	299270		625980
		Units	2500		2500
		Overhead per unit	120		250