Assignment
Black and Blue Sports Inc. manufactures two products: snowboards and skis. The factory overhead incurred is as follows:
|
1
|
Indirect labor
|
$507,000.00
|
|
2
|
Cutting Department
|
156,000.00
|
|
3
|
Finishing Department
|
192,000.00
|
|
4
|
Total
|
$855,000.00
|
Theactivity base associated with the two production departments is direct labor hours. The indirect labor can be assigned to two different activities as follows:
|
1
|
Activity
|
Budgeted Activity Cost
|
Activity Base
|
|
2
|
Production control
|
$237,000.00
|
Number of production runs
|
|
3
|
Materials handling
|
270,000.00
|
Number of moves
|
|
4
|
Total
|
$507,000.00
|
|
The activity-base usage quantities and units produced for the two products follow:
|
Number of Production Runs
|
Number of Moves
|
Direct Labor Hours Cutting
|
Direct Labor Hours Finishing
|
Units Produced
|
|
Snowboards
|
430
|
5,000
|
4,000
|
2,000
|
6,000
|
|
Skis
|
70
|
2,500
|
2,000
|
4,000
|
6,000
|
|
Total
|
500
|
7,500
|
6,000
|
6,000
|
12,000
|
Required:
1. Determine the factory overhead rates under the multiple production department rate method. Assume that indirect labor is associated with the production departments, so that the total factory overhead is $315,000 and $540,000 for the Cutting and Finishing departments, respectively.* **
2. Determine the total and per-unit factory overhead costs allocated to each product, using the multiple production department overhead rates in (1).* **
Complete the Activity Tables for snowboards and skis.
3. Determine the activity rates, assuming that the indirect labor is associated with activities rather than with the production departments.*
4. Determine the total and per-unit cost assigned to each product under activity-based costing.*
5. Explain the difference in the per-unit overhead allocated to each product under the multiple production department factory overhead rate and activity-based costing methods.
* If required, round your answers to two decimal places.
** Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.
X Amount Descriptions
Amount Descriptions
Cutting Department
Finishing Department
Production Control
Materials Handling
Setups
Skis
Snowboards.