Alabama Paper Company manufactures three products (computer paper, newsprint, and specialty paper) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows:

The activity bases identified for each activity are as follows:

The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows:

Each product requires 0.9 machine hour per unit.

1. Determine the activity rate for each activity.
2. Determine the total and per-unit activity cost for all three products.
3. Why aren€™t the activity unit costs equal across all three products since they require the same machine time per unit?

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Activity Cost Pool Activity Production Setup Moving Shipping Product engineering Total $437,400 176,000 31,200 105,300 127,500 $877,400 Activity Base Activity Production Setup Moving Shipping Product engineering Machine hours Number of setups Number of moves Number of customer orders Number of test runs