Activity-Based Costing: Factory Overhead Costs The total factory overhead for Ba
ID: 2339482 • Letter: A
Question
Activity-Based Costing: Factory Overhead Costs
The total factory overhead for Bardot Marine Company is budgeted for the year at $1,314,700, divided into four activities: fabrication, $492,000; assembly, $220,000; setup, $325,950; and inspection, $276,750. 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:
Each product is budgeted for 3,500 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.
Fabrication Assembly Setup Inspection Speedboat 10,250 dlh 33,000 dlh 74 setups 128 inspections Bass boat 30,750 11,000 541 897 41,000 dlh 44,000 dlh 615 setups 1025 inspectionsExplanation / Answer
Solution:
Part 1 – Activity Rate for each activity
Activity Cost Pool
Estimated Overhead (A)
Estimated Use of Cost Drivers (B)
Activity-Based OH Rate (A / B)
Fabrication
$492,000
41000
Direct labor hour
$12.00
per direct labor hour
Assembly
$220,000
44000
Direct labor hour
$5.00
per direct labor hour
Setup
$325,950
615
Setups
$530.00
per setup
Inspection
$276,750
1025
Inspection
$270.00
per inspection
$1,314,700
Part 2 – Factory Overhead Per Unit for each product
Speedboat
Bass Boat
Expected Usage
OH Rate
Assigned Overhead
Expected Usage
OH Rate
Assigned Overhead
Fabrication
10250
$12
$123,000
30750
$12
$369,000
Assembly
33000
$5
$165,000
11000
$5
$55,000
Setup
74
$530
$39,220
541
$530
$286,730
Inspection
128
$270
$34,560
897
$270
$242,190
Total Overhead Assigned
$361,780
$952,920
Budgeted Production Units
3,500 Units
3,500 Units
Overhead Per Unit (Total Overhead Assigned / Units)
$103
$272
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Activity Cost Pool
Estimated Overhead (A)
Estimated Use of Cost Drivers (B)
Activity-Based OH Rate (A / B)
Fabrication
$492,000
41000
Direct labor hour
$12.00
per direct labor hour
Assembly
$220,000
44000
Direct labor hour
$5.00
per direct labor hour
Setup
$325,950
615
Setups
$530.00
per setup
Inspection
$276,750
1025
Inspection
$270.00
per inspection
$1,314,700
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