Bow Boards manufactures two models of surfboards, Basic and Competition, in a facility in Southern California. In fabrication, machine setup costs are driven by the number of setups, machine maintenance and utility costs increase with the number of machine hours, and indir labor costs increase with direct labor hours. Facility rent and machine depreciation are fixed, and are the basis of manufacturing capacity. Fixed costs are allocated equally to each unit produced, regardless of model. Currently, Bow uses 80% of its manufacturing capacity. The cost of unused capacity is not assigned to products, but is expensed as a separate line item For 2020, Bow has budgeted the following (Click the icon to view other information) (Click the icon to view the budgeted information.) Read the requirements Requirement 1. Calculate the cost-allocation rate for each of the activity-cost pools for variable and fixed overhead costs. Select the formula you will use, then calculate the cost driver rate. (Round the cost driver rates to the nearest cent, SX XX "Machine maint & util= "Mach maintenance and utility costs". When calculating the cost driver rates for facility rent and depreciation, use a numerator that accounts for the fact that Bow uses only 80% of its manufacturing capacity) Cost driver rate Requirements 1. Calculate the cost-allocation rate for each of the activity-cost pools for variable and fixed overhead costs. 2. Calculate the cost of unused capacity for the year 3. 4. Calculate the total cost for each model, and the cost per unit for each model Bow has the opportunity to sublease the unused factory space to a startup company that will be manufacturing surf apparel. None of Bow's machinery will be used is there a minimum annual rent that Bow should charge? Are there any other considerations that Bow's management should make prior to offering the space? Print Done - X Data table Bow Boards Budgeted Costs for the Year Ended December 31, 2020 Direct materials-Basic boards Direct materials-Competition boards Direct manufacturing labor-Basic boards Direct manufacturing labor-Competition boards Machine setup costs Machine maintenance and utility costs Indirect labor costs $ 110.000 208,000 145,600 270,400 30,000 422.500 41.600 SEE ANA X Data table Other information: Units produced Machine hours Number of setups Direct labor-hours Print Basic 5,500 31,000 500 11.200 Done Competition 6.500 53.500 100 20,800 X

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Bow Boards manufactures two models of surfboards, Basic and Competition, in a facility in Southern California. In fabrication, machine setup costs are driven by the number of setups, machine maintenance and utility costs increase with the number of machine hours, and indirect
labor costs increase with direct labor hours. Facility rent and machine depreciation are fixed, and are the basis of manufacturing capacity. Fixed costs are allocated equally to each unit produced, regardless of model. Currently, Bow uses 80% of its manufacturing capacity. The
cost of unused capacity is not assigned to products, but is expensed as a separate line item. For 2020, Bow has budgeted the following:
(Click the icon to view the budgeted information.)
(Click the icon to view other information.)
Read the requirements.
Requirement 1. Calculate the cost-allocation rate for each of the activity-cost pools for variable and fixed overhead costs. Select the formula you will use, then calculate the cost driver rate. (Round the cost driver rates to the nearest cent, SX XX. "Machine maint & util" = "Machine
maintenance and utility costs". When calculating the cost driver rates for facility rent and depreciation, use a numerator that accounts for the fact that Bow uses only 80% of its manufacturing capacity.)
Cost driver rate
Requirements
1.
Calculate the cost-allocation rate for each of the activity-cost pools for
variable and fixed overhead costs.
2.
Calculate the cost of unused capacity for the year.
4.
3. Calculate the total cost for each model, and the cost per unit for each model.
Bow has the opportunity to sublease the unused factory space to a startup
company that will be manufacturing surf apparel. None of Bow's machinery
will be used. Is there a minimum annual rent that Bow should charge? Are
there any other considerations that Bow's management should make prior to
offering the space?
Print
- X
Done
Data table
Bow Boards
Budgeted Costs for the
Year Ended December 31, 2020
Direct materials-Basic boards
Direct materials Competition boards
Direct manufacturing labor-Basic boards
Direct manufacturing labor-Competition boards
Machine setup costs
Machine maintenance and utility costs
Indirect labor costs
Facility rent
Machine depreciation
Print
Done
S
- X
110,000
208,000
145,600
270,400
30,000
422,500
41,600
255,000
22,500
Data table
Other information:
Units produced
Machine hours
Number of setups
Direct labor-hours
Print
Basic
5,500
31,000
500
11,200
Done
Competition
6.500
53,500
100
20,800
X
Transcribed Image Text:Bow Boards manufactures two models of surfboards, Basic and Competition, in a facility in Southern California. In fabrication, machine setup costs are driven by the number of setups, machine maintenance and utility costs increase with the number of machine hours, and indirect labor costs increase with direct labor hours. Facility rent and machine depreciation are fixed, and are the basis of manufacturing capacity. Fixed costs are allocated equally to each unit produced, regardless of model. Currently, Bow uses 80% of its manufacturing capacity. The cost of unused capacity is not assigned to products, but is expensed as a separate line item. For 2020, Bow has budgeted the following: (Click the icon to view the budgeted information.) (Click the icon to view other information.) Read the requirements. Requirement 1. Calculate the cost-allocation rate for each of the activity-cost pools for variable and fixed overhead costs. Select the formula you will use, then calculate the cost driver rate. (Round the cost driver rates to the nearest cent, SX XX. "Machine maint & util" = "Machine maintenance and utility costs". When calculating the cost driver rates for facility rent and depreciation, use a numerator that accounts for the fact that Bow uses only 80% of its manufacturing capacity.) Cost driver rate Requirements 1. Calculate the cost-allocation rate for each of the activity-cost pools for variable and fixed overhead costs. 2. Calculate the cost of unused capacity for the year. 4. 3. Calculate the total cost for each model, and the cost per unit for each model. Bow has the opportunity to sublease the unused factory space to a startup company that will be manufacturing surf apparel. None of Bow's machinery will be used. Is there a minimum annual rent that Bow should charge? Are there any other considerations that Bow's management should make prior to offering the space? Print - X Done Data table Bow Boards Budgeted Costs for the Year Ended December 31, 2020 Direct materials-Basic boards Direct materials Competition boards Direct manufacturing labor-Basic boards Direct manufacturing labor-Competition boards Machine setup costs Machine maintenance and utility costs Indirect labor costs Facility rent Machine depreciation Print Done S - X 110,000 208,000 145,600 270,400 30,000 422,500 41,600 255,000 22,500 Data table Other information: Units produced Machine hours Number of setups Direct labor-hours Print Basic 5,500 31,000 500 11,200 Done Competition 6.500 53,500 100 20,800 X
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