Question

Activity-Based Costing: Factory Overhead Costs

The total factory overhead for Bardot Marine Company is budgeted for the year at $1,344,900, divided into four activities: fabrication, $672,000; assembly, $234,000; setup, $239,400; and inspection, $199,500. 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:

FabricationAssemblySetupInspection

Speedboat10,500dlh29,250dlh76setups131inspections

Bass boat31,500 9,750 554 919

42,000dlh39,000dlh630setups1,050inspections

Each product is budgeted for 4,000 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.
	Activity rates
Fabrication [ 672000/42000 ]	16	per direct labor hour
Assembly [ 234000 / 39000 ]	6	per direct labor hour
Setup [ 239400/630 ]	380	per setup
Inspection [ 199500 / 1050 ]	190	per inspection

b.
	Speedboat	Bass boat
Overhead allocation :
Fabrication	168000	504000
Assembly [ 234000 / 39000 ]	175500	58500
Setup [ 239400/630 ]	28880	210520
Inspection [ 199500 / 1050 ]	24890	174610
Total overhead allocated	397270	947630
(/) Budgeted units of production	4000	4000
activity-based factory overhead per unit	99	237