Question

The total factory overhead for Bardot Marine Company is budgeted for the year at $600,000, divided into four activities:

Fabrication $204,000; Assembly $105,000; Setup $156,000; and Inspection $135,000.
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 Assembly Setup Inspection
Speedboat 2,000 dlh 1,000 dlh 300 setups 1,100 inspections
Bass boat 3,000 dlh 3,000 dlh 400 setups 1,500 inspections
Each product is budgeted for 250 units of production for the year.
a. Determine the activity rates for each activity.
b. Determine(A) the activity rates for each activity and (B) the activity based factory overhead per unit for each product.

Answer 1

Bardot Marine Company

a. Activity rates for each activity:

Fabrication = $40.80/dlh

Assembly = $26.25/dlh

Setup = $222.86/dlh

Inspection = $51.92/dlh

b. The activity based factory overhead per unit for each product:

Speed Bass

Boats Boats

Factory Overhead per unit $927.25 $1472.70

Step-by-step explanation:

a) Data and Calculations:

Activities Budgeted Speed Bass

Overheads Boats Boats Total Activity rates

Fabrication $204,000 2,000 dlh 3,000 dlh 5,000 dlh $40.80/dlh

Assembly $105,000 1,000 dlh 3,000 dlh 4,000 dlh $26.25/dlh

Setup $156,000 300 dlh 400 dlh 700 dlh $222.86/dlh

Inspection $135,000 1,100 dlh 1,500 dlh 2,600 dlh $51.92/dlh

Total costs $600,000

Units budgeted 250 250 500 units

Speed Bass

Boats Boats

Fabrication = $40.80/dlh $81,600 $122,400

Assembly = $26.25/dlh 26,250 78,750

Setup = $222.86/dlh 66,850 89,144

Inspection = $51.92/dlh 57,112 77,880

Total assigned costs $231,812 $368,174

Units budgeted 250 250

Overhead per unit $927.25 $1472.70