The Turtle Company Has Total Estimated Factory Overhead for the Year

question 130

Essay

The Turtle Company has total estimated factory overhead for the year of $1,200,000, divided into four activities: fabrication, $600,000; assembly, $240,000; setup, $200,000; and materials handling, $160,000. Turtle manufactures two products, Boogie Boards and Surf Boards. The activity-base usage quantities for each product by each activity are as follows: $\begin{array}{|l|l|l|l|l|}\hline & \text { Fabrication } & \text { Assembly } & \text { Setup } & \begin{array}{l}\text { Materials } \\\text { Handling }\end{array} \\\hline \text { Boogie Boards } & 10,000 \mathrm{dlh} & 30,000 \mathrm{dlh} & 60 \text { setups } & 100 \text { moves } \\\hline \text { Surf Boards } & \underline{30,000} & \underline{10,000} & \underline{440} & \underline{700} \\\hline & \underline{40,000} \mathrm{dlh} & \underline{40,000} \mathrm{dlh} & \underline{500} \text { setups } & \underline{800} \text { moves } \\\hline\end{array}$ Each product is budgeted for 10,000 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.

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Definitions:

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