The total factory overhead for Diva-nation is budgeted for the year at $180,000,
ID: 2479161 • Letter: T
Question
The total factory overhead for Diva-nation is budgeted for the year at $180,000, divided into four activities: cutting, $18,000; sewing, $36,000; setup, $96,000; and inspection, $30,000. Diva-nation manufactures two types of men’s pants: jeans and khakis. The activity-base usage quantities for each product by each activity are as follows: Cutting Sewing Setup Inspection Jeans 800 dlh 1,200 dlh 1,400 setups 3,000 inspections Khakis 1,200 800 1,000 2,000 2,000 dlh 2,000 dlh 2,400 setups 5,000 inspections Each product is budgeted for 20,000 units of production for the year. Required: Complete the Activity Tables for jeans and khakis. A. Determine the activity rates for each activity. Enter these rates in the Activity Rate columns.* B. Use the activity rates in (A) to determine the activity-based factory overhead per unit for each product.* * When required, round all per-unit answers to the nearest cent.
Complete the Activity Table for Jeans. A. Determine the activity rates for each activity. Enter these rates in the Activity Rate columns. B. Use the activity rates in (A) to determine the activity-based factory overhead per unit for each product. * When required, round all per-unit answers to the nearest cent.Explanation / Answer
(A) Statement of Activity Rates:-
Activities
Cost (A)
Total No of Activities (B)
Activity Rate
(A/B)
Cutting
18000
2000 dlh
9
Sewing
36000
2000 dlh
18
Setup
96000
2400 setup
40
Inspection
30000
5000 inspections
6
(B) O/H per unit using ABC method:-
Jeans
Khakis
Cutting
(800 dlh * 9)
=7200
(1200 dlh * 9)
=10800
Sewing
(1200 dlh * 18)
=21600
(800 dlh * 18)
=14400
Setup
(1400 setups * 40)
=56000
(1000 setup * 40)
=40000
Inspection
(3000 inspection * 6)
=18000
(2000 inspection * 6)
=12000
102800
77200
Activities
Cost (A)
Total No of Activities (B)
Activity Rate
(A/B)
Cutting
18000
2000 dlh
9
Sewing
36000
2000 dlh
18
Setup
96000
2400 setup
40
Inspection
30000
5000 inspections
6
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