Problem
Mainline Marine Company has total estimated factory overhead for the year of $2,090,000, divided into four activities: fabrication, $750,000; assembly, $240,000; setup, $600,000; and inspection, $500,000. Mainline 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:
|
Fabrication
|
Assembly
|
Setup
|
Inspection
|
|
Speedboat
|
1,200 dlh
|
1,800 dlh
|
60 setups
|
600 inspections
|
|
Bass boat
|
1,800 dlh
|
1,200 dlh
|
100 setups
|
200 inspections
|
|
3,000dlh
|
3,000 dlh
|
160 setups
|
800 inspections
|
Each product is budgeted for 200 units of production for the year.
a. Determine the activity rates for each activity.
|
Fabrication
|
$ per dlh
|
|
Assembly
|
$ per dlh
|
|
Setup
|
$ per setup
|
|
Inspection
|
$ per inspection
|
b. Determine the factory overhead cost per unit for each product, using activity-based costing.