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

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:

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	Number of	Direct Labor Hours	Direct Labor Hours	Units
	Production Runs	Moves	Cutting	Finishing	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.

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. 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.

1	Department	Production Department Rate
2			per direct labor hour
3			per direct labor hour

2. Determine the total and per-unit factory overhead costs allocated to each product, using the multiple production department overhead rates in (1). 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.

Question not attempted.

Score: 0/28

1	Product	Total Factory Overhead	Factory Overhead Per Unit
2
3

Points:

0 / 6

Feedback

Check My Work

Calculate for each product:

Activity base-usage x Department Rate from Req. (1) = Allocated factory overhead for each department

Then sum all department costs per product to determine a total and divide the total overhead by budgeted units to derive the overhead per unit for each product.

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.*
	* If required, round your answers to two decimal places.

	Snowboards
Activity	Activity-		Activity		Activity
	Usage	X	Rate	=	Cost
Production control	prod. runs		/prod. run
Materials handling	moves		/move
Cutting Department	dlh		/dlh
Finishing Department	dlh		/dlh
Total
Number of units
Activity cost per unit

Points:

8 / 23

Feedback

Check My Work

Calculate for each activity:

Overhead Activity base = Activity Rate

Calculate for each product:

Activity usage x Activity rate from Req. (3) = Activity cost; Sum all activity costs per product to determine a total and divide the total overhead by budgeted units to derive the activity costs per unit for each product.

Activity Table - Skis

Shaded cells have feedback.

Complete the Activity Table for 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.*
	* If required, round your answers to two decimal places.

	Skis
Activity	Activity-		Activity		Activity
	Usage	X	Rate	=	Cost
Production control	prod. runs		/prod. run
Materials handling	moves		/move
Cutting Department	dlh		/dlh
Finishing Department	dlh		/dlh
Total
Number of units
Activity cost per unit

Points:

8 / 23

Feedback

Check My Work

Calculate for each activity:

Overhead Activity base = Activity Rate

Calculate for each product:

Activity usage x Activity rate from Req. (3) = Activity cost; Sum all activity costs per product to determine a total and divide the total overhead by budgeted units to derive the activity costs per unit for each product.

1	Product	Total Factory Overhead	Factory Overhead Per Unit
2
3