Select two real companies or businesses. You will have to give a new name to the companies selected. Your selection will be kept on the secret until the presentation of your final project.Watch these

10/1/2018 CengageNOWv2 | Online teaching and learning resource from Cengage Learning https://v2.cengagenow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=assignments&takeAssignmentSessionLocator=assignment-take&in … 1/3 Activity-based and department rate product costing and product cost distortions Black and Blue Sports Inc. manufactures two products: snowboards and skis. The factory overhead incurred is as follows:

The activity base associated with the two production departments is direct labor hours. The indirect labor can be assigned to two dif ferent activities as follows: The activity-base usage quantities and units produced for the two products follow: Number of Number of Direct Labor Hours— Direct Labor Hours— Units Production Runs Moves Cutting Finishing Produced Snowboards 430 5,000 4,000 2,000 6,000 Skis 70 2,500 2,000 4,000 6,000 Total 500 7,500 6,000 6,000 12,000 Required:

1. Determine the factory overhead rates under the multiple production department rate method. Assume that indirect labor is associated with the production departments, so that the total factory overhead is $315,000 and $540,000 for the Cutting and Finishing departments, respectively .* 2. Determine the total and per-unit factory overhead costs allocated to each product, using the multiple production department overhead rates in (1).* Complete the Activity Tables for snowboards and skis. 3. Determine the activity rates , assuming that the indirect labor is associated with activities rather than with the production departments.** 4. Determine the total and per -unit cost assigned to each product under activity-based costing .** 5. Explain the difference in the per -unit overhead allocated to each product under the multiple production department factory overhead rate and activity-based costing methods. *If required, round your answers to two decimal places. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.

** If required, round your cost per -unit answer to two decimal places. Instructions 1 In dir e ct l a b or $ 507,0 00.0 0 2 C uttin g D ep art m en t 1 56,0 00.0 0 3 Fin is h in g D ep art m en t 1 92,0 00.0 0 4 Tota l $ 855,0 00.0 0 1 A ctiv it y B udgete d A ctiv it y C ost A ctiv it y B ase 2 P ro d u ctio n c o n tro l $ 237,0 00.0 0 N um ber o f p ro d u ctio n  r u n s 3 M ate ria ls h an dlin g 2 70,0 00.0 0 N um ber o f m ove s 4 T ota l $ 507,0 00.0 0   Amount Descriptions 10/1/2018 CengageNOWv2 | Online teaching and learning resource from Cengage Learning https://v2.cengagenow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=assignments&takeAssignmentSessionLocator=assignment-take&in … 2/3 Amount Descriptions Cutting Department Finishing Department Production Control Materials Handling Setups Skis Snowboards 1. Determine the factory overhead rates under the multiple production department rate method. Assume that indirect labor is associated with the production departments, so that the total factory overhead is $315,000 and $540,000 for the Cutting and Finishing departments, respectively . If required, round your answers to two decimal places.

Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.

2. Determine the total and per-unit factory overhead costs allocated to each product, using the multiple production department overhead rates in (1). If required, round your answers to two decimal places. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Complete the Activity Tables for snowboards and skis.

3. Determine the activity rates , assuming that the indirect labor is associated with activities rather than with the production departments. Enter these rates in the Activity Rate columns. 4. Determine the total and per -unit cost assigned to each product under activity-based costing. If required, round your cost per -unit answer to two decimal places. Snowboards Activity Activity- Activity Activity Usage X Rate = Cost Production control Materials handling Factory Overhead Rates 1 Dep art m en t P ro d u ctio n D ep art m en t R ate   2 C uttin g D ep art m en t $ 2.0 0 per d ir e ct l a b or h ou r 3 Fin is h in g D ep art m en t $ 3.0 0 per d ir e ct l a b or h ou r Factory Overhead Costs 1 P ro d u ct T ota l F acto ry O ve rh ead F acto ry O ve rh ead P er U nit 2 S n ow board s $ 390,0 00.0 0 $65.0 0 3 Skis Activity T able - Snowboards $ $ $ 10/1/2018 CengageNOWv2 | Online teaching and learning resource from Cengage Learning https://v2.cengagenow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=assignments&takeAssignmentSessionLocator=assignment-take&in … 3/3 Cutting Department Finishing Department Total Number of units Activity cost per unit Complete the Activity T able for skis.

3. Determine the activity rates , assuming that the indirect labor is associated with activities rather than with the production departments. Enter these rates in the Activity Rate columns. 4. Determine the total and per -unit cost assigned to each product under activity-based costing. If required, round your cost per -unit answer to two decimal places. Skis Activity Activity- Activity Activity Usage X Rate = Cost Production control Materials handling Cutting Department Finishing Department Total Number of units Activity cost per unit 5. Explain the dif ference in the per-unit overhead allocated to each product under the multiple production department factory overhead rate and activity-based costing methods. Check all that apply . $ $ $$ Activity Table - Skis $ $ $ $ $ $$ Final Question The multiple production department factory overhead rate method distorts the unit costs.

The activity-based method separately accounts for the production control and materials handling activity costs, decreasing cost distortion.

The activity-based overhead allocation reveals that snowboards are more costly on a per-unit basis than are the skis.

Snowboards have fewer production control and number of moves than do skis, so skis have higher activity costs per unit.