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24 September, 20:21

The total factory overhead for magnum corporation is budgeted for the year at $500,000. this is divided into three activity pools: fabrication, $246,000; assembly, $144,000, and setup, $110,000. magnum manufactures two types of kayaks: basic and deluxe. the activity-based usage quantities for each project by activity is as follows: fabrication assembly setup basic 2,000 dlh 8,000 dlh 5 setups deluxe 10,000 dlh 24,000 dlh 15 setups total activity-base usage 12,000 dlh 32,000 dlh 20 setups each product is budgeted for 2,500 units of production for the year. what is the activity-based factory overhead per unit for the deluxe kayak?

a. $158.20

b. $41.80

c. $154.54

d. $100.00

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  1. 24 September, 20:45
    0
    Cost drivers for the activities are as below:

    Basic Delux Total

    Fabrication 2000 10000 12000

    Assembly 8000 24000 32000

    Set up 5 15 20

    Total Cost of below activities are as follows:

    Fabricators $246000

    Assembly $144000

    Set Up $110000

    Cost per Activity = Total Cost per Activity/Total Cost Driver per activity

    Fabrication = 246000/12000=$20.5 per dlh

    Assembly=144000/32000=$4.5 per dlh

    Set-up=110000/20=$5500set up

    Drivers used for production of Deluxe kayak along with cost:

    Fabricators=10000 dlh*$20.5 per dlh = $205000

    Assembly = 24000dlh*$4.5 per dlh = $108000

    Set Up=15 set ups*$5500 per set up = $82500

    Total Cost = $395500

    Cost per unit = $395500/2500 units

    Cost per Unit = $158.20 per unit.
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