Roberts Company produces two weed eaters: basic and advanced. The company has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below.

Overhead costs:
Machining ......... $6,000,000
Engineering ......... 2,000,000
Receiving ......... 560,000
Inspecting products ..... 360,000
Required:
1. Calculate the four activity rates.
2. Calculate the unit costs using activity rates. Also, calculate the overhead cost per unit.
3. What if consumption ratios instead of activity rates were used to assign costs instead of activity rates? Show the cost assignment for the inspection activity.

Transcribed Image Text:

Basic Advanced Total Units produced Prime costs Machine hours Engineering hours Receiving orders Inspection hours 100,000 S8,000,000 100,000 400 400 800 300,000 $30,000,000 500,000 3,600 1,200 1,600 S38,000,000 600,000 4,000 1,600 2,400