The total factory overhead for Cypress Marine Company is budgeted for the year at $900,000, divided into four activities: fabrication, $240,000, assembly, $128,000, setup, $160,000, and inspection, $372,000. Cypress Marine manufactures two types of boats: speedboats and bass boats. The activity-base usage quantities for each product by each activity are as follows: Item Fabrication Assembly Setup Inspection Speedboat 2,800 dlh 1,200 dlh 300 setups 1,100 inspections Bass boat 2,000 2,000 100 400 Total 4,800 dlh 3,200 dlh 400 setups 1,500 inspections Each product is budgeted for 400 units of production for the year. a. Determine the activity rates for each activity. Activities Amount Fabrication fill in the blank 1 of 4$ per dlh Assembly fill in the blank 2 of 4$ per dlh Setup fill in the blank 3 of 4$ per setup Inspection fill in the blank 4 of 4$ per inspection b. Determine the activity-based factory overhead per unit for each product. Speedboats fill in the blank 1 of 2$ per unit Bass Boats fill in the blank 2 of 2$ per unit
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
The total factory
| Item | Fabrication | Assembly | Setup | Inspection |
|---|---|---|---|---|
| Speedboat | 2,800 dlh | 1,200 dlh | 300 setups | 1,100 inspections |
| Bass boat | 2,000 | 2,000 | 100 | 400 |
| Total | 4,800 dlh | 3,200 dlh | 400 setups | 1,500 inspections |
Each product is budgeted for 400 units of production for the year.
a. Determine the activity rates for each activity.
| Activities | Amount |
|---|---|
| Fabrication | fill in the blank 1 of 4$ per dlh |
| Assembly | fill in the blank 2 of 4$ per dlh |
| Setup | fill in the blank 3 of 4$ per setup |
| Inspection | fill in the blank 4 of 4$ per inspection |
b. Determine the activity-based factory overhead per unit for each product.
Speedboats fill in the blank 1 of 2$ per unit
Bass Boats fill in the blank 2 of 2$ per unit
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