503 MBA - Spreadsheet please 45. Surfs Up manufactures...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Spreadsheet please 45. Surfs Up manufactures surfboards. The company produces two models: the small board and the big board. Data regarding two boards are as follows: Products Direct Labor Hours per Units Annual Production Total Direct Labor Hours Big 1.5 10,000 boards 15,000 Small 1.0 35,000 boards 35,000 The big board requires $75 in direct materials per unit, whereas the small board requires $40. The company pays an average direct labor rate id $13 per hour. The company has historically used direct labor hours as the activity base for applying overhead to the boards. Manufacturing overhead is estimated to be $1,664,000 per year. The big board is more complex to manufacture than the small board because it requires more machine time. Blake Moore, the company’s controller, is considering the use of activity-based costing to apply overhead because the surfboards require such different amounts of machining. Blake has identified the following four separate activity centers. Volume of Annual Activity Activity Center Cost Drive Traceable Cost Big Board Small Board Machine setup Number of setups $100,000 100 100 Special design Design hours 364,000 900 100 Production Direct labor hours 900,000
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 08/22/2010 for the course MBA 12876 taught by Professor Mr.west during the Spring '10 term at Valdosta State University .

Page1 / 3

503 MBA - Spreadsheet please 45. Surfs Up manufactures...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online