Activity-Based Costing: Factory Overhead Costs

The total factory overhead for Urban Styles, Inc. is budgeted for the year at $822,550, divided into four activity pools: cutting, $351,000; sewing, $130,000; setup, $186,300; and inspection, $155,250. Urban manufactures two types of men's pants: jeans and khakis. The activity-base usage quantities for each product by each activity are as follows:

	Cutting		Sewing		Setup		Inspection
Jeans	6,750	dlh	19,500	dlh	49	setups	84	inspections
Khakis	20,250		6,500		356		591
	27,000	dlh	26,000	dlh	405	setups	675	inspections

Each product is budgeted for 7,500 units of production for the year.

a. Determine the activity rates for each activity.

Cutting	$ per direct labor hour
Sewing	$ 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.

Jeans	$ per unit
Khakis	$ per unit