Canine Company Has Total Estimated Factory Overhead for the Year

question 62

Essay

Canine Company has total estimated factory overhead for the year of $2,400,000, divided into four activities: fabrication, $1,200,000; assembly, $480,000; setup, $400,000; and materials handling, $320,000. Canine manufactures two products, Standard Crates and Deluxe Crates. The activity-base usage quantities for each product by each activity are as follows:​ Each product is budgeted for 20,000 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:

Reacquisition

The process of buying back or otherwise regaining possession of something previously sold, lost, or given away.

Instrument

A formal legal document, such as a contract, will, bond, lease, or loan, that establishes legal rights and obligations.

Negotiation

A bargaining process in which disputing parties interact informally to attempt to resolve their dispute. Also, the transfer of the rights to a negotiable instrument from one party to another.

Liability

The state of being responsible for something, especially in terms of legal or financial obligations that may arise from actions or transactions.