33. Sea Worthy makes 2 different types of custom boats, commercial fishing and s
ID: 2456556 • Letter: 3
Question
33. Sea Worthy makes 2 different types of custom boats, commercial fishing and sail boats both for recreation and competition. The company consists of two different departments, design, and production. The company has decided to allocate overhead costs in each of the two cost pools. The direct labor cost per hour is $18. Data on estimated overhead follows:
Activity
Driver
Estimated Overhead Cost
Sailboats Estimate
Fishing Boats Estimate
Product design
# of designs
$130,000
45 designs
55 designs
Quality control
# of inspections
$119,560
560 inspections
420 inspections
If the company designs and produces and sells 48 sailboats, each sailboat requires 1,800 labor hours and 12 inspections, how much overhead will be assigned to each sailboat produced?
Activity
Driver
Estimated Overhead Cost
Sailboats Estimate
Fishing Boats Estimate
Product design
# of designs
$130,000
45 designs
55 designs
Quality control
# of inspections
$119,560
560 inspections
420 inspections
Explanation / Answer
Activity
Estimated Overhaed
Sailboats Estimate
Fishingboat Estimate
Rate per boat
Product Design
1,30,000.00
45.00
55.00
1,300.00
Quality Control
1,19,560.00
560.00
420.00
122.00
Overhead to be assigned to each sailboat
Sailboats Estimate
Nos. of boat to be designed & produced
48.00
Rate per design
1,300.00
Total design cost (a)
62,400.00
Nos. of inspection to be done
576.00
Rate per inspection
122.00
Total inspection cost
70,272.00
Total Overhead (a+b)
1,32,672.00
Note: It is assumed that overhead are vairable
Activity
Estimated Overhaed
Sailboats Estimate
Fishingboat Estimate
Rate per boat
Product Design
1,30,000.00
45.00
55.00
1,300.00
Quality Control
1,19,560.00
560.00
420.00
122.00
Overhead to be assigned to each sailboat
Sailboats Estimate
Nos. of boat to be designed & produced
48.00
Rate per design
1,300.00
Total design cost (a)
62,400.00
Nos. of inspection to be done
576.00
Rate per inspection
122.00
Total inspection cost
70,272.00
Total Overhead (a+b)
1,32,672.00
Note: It is assumed that overhead are vairable
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