Question

The total factory overhead for Bardot Marine Company is budgeted for the year at $1,400,400, divided into four activities: fabrication, $588,000; assembly, $258,000; setup, $302,400; and inspection, $252,000. 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	10,500	dlh	32,250	dlh	76	setups	131	inspections
Bass boat	31,500		10,750		554		919
	42,000	dlh	43,000	dlh	630	setups	1,050	inspections

Each product is budgeted for 2,500 units of production for the year.

a. Determine the activity rates for each activity.

b. Determine the activity-based factory overhead per unit for each product. Round to the nearest whole dollar.

Answer 1

a
Fabrication	14	per direct labor hour	=588000/42000
Assembly	6	per direct labor hour	=258000/43000
Setup	480	per setup	=302400/630
Inspection	240	per inspection	=252000/1050
b
Speedboat	163	per unit
Bass boat	397	per unit
Workings:
	Speedboat	Bass boat
Fabrication	147000	441000
Assembly	193500	64500
Setup	36480	265920
Inspection	31440	220560
Total overhead	408420	991980
Divide by units	2500	2500
Factory overhead per unit	163	397
	Speedboat	Bass boat
Fabrication	=10500*14	=31500*14
Assembly	=32250*6	=10750*6
Setup	=76*480	=554*480
Inspection	=131*240	=919*240