Question

Accounting numeric field ry Overhead Costs The total factory overhead for Bardot Marine Company is budgeted for the year at $507,200, divided into four activities: fabrication, $192,000; assembly, $80,000; setup, $127,200; and inspection, $108,000. 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 4,000 dlh 12,000 Speedboat Assembly 12,000 dlh 4,000 Setup 29 setups Inspection 50 inspections 350 Bass boat 211 16,000 dlh 16,000 dlh 240 setups 400 inspections Each product is budgeted for 2,500 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

Ans. A	Activity rate   = Overhead cost / Activity drivers
	Activity	Overhead cost	Activity drivers	Activiy rate
		( A)	(B)	(A / B)
	Fabrication	$192,000	16000	$12.00	per direct labor hr.
	Assembly	$80,000	16000	$5.00	per direct labor hr.
	Setup	$127,200	240	$530.00	per setup
	Inspection	$108,000	400	$270.00	per inspection
Ans. B	To calculate factory overhead per unit, we need to calculate overhead cost assigned by the following way:
	Overhead cost assigned =   Activity rate * Activity driver incurred
				Speedboat		Bass boat
	Activity	Activiy rate		Activity driver incurred	Overhead assigned	Activity driver incurred	Overhead assigned
		(A)		(B)	(A * B)	©	(A * C)
	Fabrication	$12.00	per direct labor hr.	4000	$48,000	12000	$144,000
	Assembly	$5.00	per direct labor hr.	12000	$60,000	4000	$20,000
	Setup	$530.00	per setup	29	$15,370	211	$111,830
	Inspection	$270.00	per inspection	50	$13,500	350	$94,500
	Total Overhead Cost				$136,870		$370,330
	Overhead per unit   = Total overhead cost / Number of units produced
		Speedboat	Bass boat
	Total Overhead Cost (a)	$136,870	$370,330
	Number of units (b)	2500	2500
	Overhead per unit (a/b)	$54.75	$148.13