Activity-Based And Department Rate Product Costing and Product Cost Distortions Black and Blue Sports Inc. manufactures two products: snowboards and skis. The factory overhead incurred is as follows: Indirect labor Cutting Department Finishing Department Total $507,000 156,000 192,000 $855,000 The activity base associated with the two production departments is direct labor hours. The Indirect labor can be assigned to two different activities as follows: Activity Production control Materials handling Total Budgeted Activity Cost $237,000 270,000 $507,000 Activity Base Number of production runs Number of moves 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 Onn Units Produced Snowhands 430 5.00 4 000 6.non Direct Labor Hours-Cutting Unito Produced Number of Production Runs 430 70 Number of Moves 5.000 2.500 Direct Labor Hours Finishing 2.000 4,000 Snowboards 4,000 5,000 6,000 Skis 2,000 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 laboris associated with the production departments, so that the total factory overheid is $15,000 and $540,000 for the cutting and Finishing departments, respectively. Round per unit amounts to the nearest whole cent. Department Production Department Rate Cutting Department per Grect labor our Fishing Department per vector hour 2. Determine the total and per-unit factory owerhead costs allocated to each prout in the maple production department overhead tein(1). Round per unit amounts to the nearest whole cent. Product Total Factory Overhead Factory Overhead Per Unit Snowboards Skis 3. Determine the activity, ing that the indirect laboris associated with activities rather than with the production desartment Round per unit amount to the nearest whole cent. Activity Activity Rate Production Control per produ Material Handling per move TIG 2. Determine the total and per unit factory overhead costs located to each product, using the multiple production department overhead rates in (1). Round per unit amounts to the nearest whole cent. Product Total Factory Overhead Factory Overhead Per Unit Snowboards Skis 3. Determine the activity rates, assuming that the indirect labor is associated with activities rather than with the production departments. Round per unit amounts to the nearest whole cent. Activity Activity Rate Production Control per prod.ru Material Handling per move Cutting Department Finishing Department per dir 4. Determine the total and per unit cost assigned to each product under activity-based costing Round the per unit amounts to the nearest whole cent Product Total Activity Cest Activity Cost Per Unit Snowboards Derdh HAR faca overhead rate and activity-based costing methods
