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
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
Chapter1: Financial Statements And Business Decisions
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