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Department Cutting Department Finishing Department 4. Determine the total and per-unit factory overhead costs allocated to each product, using the multiple production department overhead rates
Department Cutting Department Finishing Department 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. Product Snowboards Skis Production Department Rate 87 per direct labor hour 105 per direct labor hour Activity Production Control Materials Handling Cutting Department Finishing Department Total Factory Overhead 594,000 576,000 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. Product Snowboards Skis Activity Rate 180 $ Factory Overhead Per Unit 118.80 115.20 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. per prod. run per move 36 50 per dlh 80 per dlh Total Activity Cost 681,000 489,000 Activity Cost Per Unit 136.20 97.80 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 $[ 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 $ 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 more overhead. In addition, snowboards consume more 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. of
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