Reference no: EM131783991

Assignment

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

Theactivity 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 Production Runs	Number of Moves	Direct Labor Hours Cutting	Direct Labor Hours Finishing	Units 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.
** Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.

X Amount Descriptions
Amount Descriptions
Cutting Department
Finishing Department
Production Control
Materials Handling
Setups
Skis
Snowboards.