Budgeted Activity Activity Cost Activity Base Production control $90,000 Number of production runs Materials handling 270,000 Number of moves Total $360,000 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 Units Produced Snowboards 450 5,000 2,000 4,000 5,000 Skis 50 2,500 3,000 3,000 5,000 Total 500 7,500 5,000 7,000 10,000 Required: 1. Determine a single plantwide factory overhead rate based upon direct labor hours. Direct labor overhead rate: $ 97.50 per direct labor hour 2. Determine the total and per-unit factory overhead costs allocated to each product, using the plantwide overhead rate in (1). Round per unit amounts to the nearest whole cent. Total Factory Overhead Product Snowboards Skis 585,000 585,000 Factory Overhead Per Unit 117 117 3. 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 $435,000 and $735,000 for the Cutting and Finishing departments, respectively. Round per unit amounts to the nearest whole cent. Department Production Department Rate Cutting Department Finishing Department 87 per direct labor hour 105 per direct labor hour 4. Determine the total and per-unit factory overhead costs allocated to each product, using the multiple production department overhead rates in (3). Round per unit amounts to the nearest whole cent. Total Factory Overhead Product Snowboards Skis 594,000 576,000 Factory Overhead Per Unit 118.80 115.20 5. 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 Production Control Materials Handling Cutting Department Finishing Department Activity Rate 180 per prod. run 36 per move 50 per dih 80 per dih 6. 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 Snowboards Total Activity Cost Activity Cost Per Unit 681,000 Skis 489,000 136.20 97.80 more overhead. In addition, snowboards consume more 7. Comment on the differences in the per-unit overhead allocated to each product using the single plantwide factory overhead rate method, the multiple production department factory overhead rate method, and activity-based costing. The plantwide overhead method allocates s of overhead to each product, while the multiple production department method allocates $ overhead to snowboards and $ to skis. Both the plantwide and multiple production department methods do distort the allocation of overhead because they do not adequately account for how each product consumes overhead. In contrast, activity-based costing allocates $ of factory overhead to snowboards and s to skis. Activity-based costing more accurately allocates factory overhead because it better accounts for how each product consumes overhead. Snowboards consume more direct labor hours in the Finishing Department, which has production control and materials handling overhead than do skis. This is because snowboards are made in smaller lots, representing a wide variety of styles. Thus, snowboards have higher activity costs than skis.