Activity-Based Costing Maritime Marine Company has total estimated factory overh

Question

Activity-Based Costing

Maritime Marine Company has total estimated factory overhead for the year of $918,200, divided into four activities: fabrication, $377,000; assembly, $187,200; setup, $144,000; and inspection, $210,000. Maritime manufactures two types of boats: a speedboat and a bass boat. The activity-base usage quantities for each product by each activity are as follows:

Each product is budgeted for 200 units of production for the year.

a. Determine the activity rates for each activity.

b. Determine the factory overhead cost per unit for each product, using activity-based costing. If required, round to the nearest cent.

   Fabrication    Assembly    Setup    Inspection Speedboat 800 dlh 1,700 dlh 40 setups 120 inspections Bass boat 2,100 700 110 300 2,900 dlh 2,400 dlh 150 setups 420 inspections

Explanation / Answer

a.Determine the activity rate for each activity.

activity rate = activity cost / activity base

b.overhead cost per unit for each unit based on ABC.

working note:

fabrication ($377,000 / 2,900 dlh) $130 per DLH Assembly ($187,200 / 2,400 dlh) $78 per dlh setup ($144,000 / 150 setups) $960 per setup Inspection ($210,000/420 inspection) $500 per inspection

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