Davis Company produces two hair dryers: regular and deluxe. The company has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below.

Overhead costs:

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.

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Units produced Prime costs Machine hours Engineering hours Receiving orders Inspection hours Regular 100,000 $16,000,000 200,000 800 800 1,600 Deluxe 200,000 $60,000,000 1,000,000 7,200 2,400 3,200 Total $76,000,000 1,200,000 8,000 3,200 4,800