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. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. ** If required, round your cost per-unit answer 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 Cutting Dept. per direct labor hour 3 Finishing Dept. 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. 1 Product Total Factory Overhead Factory Overhead Per Unit 2 Skis 3 Snowboards

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. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. ** If required, round your cost per-unit answer 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 Cutting Dept. per direct labor hour 3 Finishing Dept. 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. 1 Product Total Factory Overhead Factory Overhead Per Unit 2 Skis 3 Snowboards

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 3PA: Activity-based and department rate product costing and product cost distortions Black and Blue...

See similar textbooks

Related questions

Concept explainers

Topic Video

Question

100%

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. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.

** If required, round your cost per-unit answer 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	Cutting Dept.		per direct labor hour
3	Finishing Dept.		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.

1	Product	Total Factory Overhead	Factory Overhead Per Unit
2	Skis
3	Snowboards

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.