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:
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.
Definitions:
Price Level
The average of current prices across the entire spectrum of goods and services produced in the economy, used to measure inflation and purchasing power.
Aggregate Demand Curve
A curve representing the relationship between the economy’s price level and real GDP demanded per period, with other things constant.
Leading Economic Indicator
A statistic about economic activities that helps analysts and policymakers predict future economic trends and business cycles.
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