Accounting 26th Edition by Carl Warren ,Jim Reeve ,Jonathan Duchac

Exercise 31

Activity-based costing
Mainline Marine Company has total estimated factory overhead for the year of $2,090,000, divided into four activities: fabrication, $750,000; assembly, $240,000; setup, $600,000; and inspection, $500,000. Mainline manufactures two types of boats: a speedboat and a bass boat. The activity-base usage quantities for each product by each activity are as follows:

Each product is budgeted for 200 units of production for the year. Determine (a) the activity rates for each activity and (b) the factory overhead cost per unit for each product, using activity-based costing.