chp 18 pt 3

DODON 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: Budgeted Activity Cost Activity Production control Materials handling $237,000 Activity Base Number of production runs Number of moves 270,000 Total $507,000 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 2,000 4,000 Units Produced Snowboards 430 5,000 4,000 Skis 70 2,500 2,000 6,000 6,000 12,000 Total 500 7,500 6,000 6,000 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. Round per unit amount to the nearest whole cent. EBOOK Skis 70 2,500 4,000 6,000 2,000 6,000 Total 500 7,500 6,000 12,000