Question

Activity-Based Costing: Factory Overhead Costs

The total factory overhead for Bardot Marine Company is budgeted for the year at $1,243,200, divided into four activities: fabrication, $608,000; assembly, $248,000; setup, $211,200; and inspection, $176,000. 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	8,000	dlh	23,250	dlh	58	setups	100	inspections
Bass boat	24,000		7,750		422		700
	32,000	dlh	31,000	dlh	480	setups	800	inspections

Each product is budgeted for 7,500 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

Activity		Total cost	Driver	Activity rate
fabrication		608000	32000	19	peer DLH
Assembly		248000	31000	8	Per DLH
Setup		211200	480	440	Per setup
Inspection		176000	800	220	Per inspection
Cost per unit
Activity		Rate	Speedboat		Bass Boat
			Activity	OH cost	Activity	OH cost
fabrication		19	8000	152000	24000	456000
Assembly		8	23250	186000	7750	62000
Setup		440	58	25520	422	185680
Inspection		220	100	22000	700	154000
	Total cost			385520		857680
	Divide: Units			7500		7500
	cost per unit			51.4		114.36