Princess Industries has employed a new accountant, Nick Gee, who has expressed concern about the cost of the products. To further understand the costs, Nick has undertaken an activity analysis of the indirect costs. His findings are as follows.

The products' use of the cost driver is estimated to be as follows.

Required:
a. Calculate the activity cost rate for each activity.
b. Calculate the product cost based on the activity analysis.

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Activity Receipt of materials Machining Deliveries Machine set-up Engineering Packaging Cost Cost driver S100000 Material receipts 300000 Machine hours 50000 100000 150000 100000 Number of deliveries Machine set-ups Engineering advice slips Cartons packed Material receipt Machine hours Number of deliveries Set-ups Engineering advices Cartons packed Standard Specialised 500 25 000 1000 750 150 200 50000 500 200 100 400