Activity Rates and Product Costs using Activity$-$Based Costing

$\backslash$begin$\{$tabular$\}\{$lrl$\}$

Activity & $\backslash$begin$\{$tabular$\}\{$c$\}$

Budgeted $\backslash \backslash$

Activity Cost

$\backslash$end$\{$tabular$\}$ & Activity Base $\backslash \backslash$

$\backslash$hline Casting & $\backslash (\backslash$$ $326,200\backslash )$ & Machine hours $\backslash \backslash$

Assembly & $148,680$ & Direct labor hours $\backslash \backslash$

Inspecting & $28,490$ & Number of inspections $\backslash \backslash$

Setup & $45,000$ & Number of setups $\backslash \backslash$

Materials handling & $36,550$ & Number of loads

$\backslash$end$\{$tabular$\}$

Corporate records were obtained to estimate the amount of activity to be used by the two products. The estimated activity$-$base usage quantities and units produced follow:

$\backslash$begin$\{$tabular$\}\{$lrrr$\}$

Activity Base & Entry & Dining & Total $\backslash \backslash$

$\backslash$hline Machine hours & $4,940$ & $4,380$ & $9,320\backslash \backslash$

Direct labor hours & $4,250$ & $6,370$ & $10,620\backslash \backslash$

Number of inspections & $1,970$ & $620$ & $2,590\backslash \backslash$

Number of setups & $240$ & $60$ & $300\backslash \backslash$

Number of loads & $670$ & $180$ & $850\backslash \backslash$

Units produced & $9,800$ & $4,900$ & $14,700$

$\backslash$end$\{$tabular$\}$

a$.$ Determine the activity rate for each activity. If required, round the rate to the nearest dollar.

$\backslash$begin$\{$tabular$\}\{$llll$\}$

Activity & $\backslash$multicolumn$\{2\}\{$c$\}\{$ Activity Rate $\}\backslash \backslash$

$\backslash$hline Casting & & $\backslash (\backslash$checkmark $\backslash )$ & per machine hour $\backslash \backslash$

Assembly & $\backslash (\backslash$vdots $\backslash )$ & $\backslash (\backslash$checkmark $\backslash )$ & per direct labor hour $\backslash \backslash$

Inspecting & $\backslash (\backslash$vdots $\backslash )$ & $\backslash (\backslash$checkmark $\backslash )$ & per inspection $\backslash \backslash$

Setup & $\backslash (\backslash$checkmark $\backslash )$ & $\backslash (\backslash$checkmark $\backslash )$ & per setup $\backslash \backslash$

Materials handling & & $\backslash (\backslash$checkmark $\backslash )$ & per load

$\backslash$end$\{$tabular$\}$

b$.$ Use the activity rates in $($a$)$ to determine the total and per$-$unit activity costs associated with each product. Round the per unit amounts to the nearest cent.

$\backslash$begin$\{$tabular$\}\{$lcc$\}$

Product & Total Activity Cost & Activity Cost Per Unit $\backslash \backslash$

$\backslash$hline Entry Lighting Fixtures & $\backslash (\backslash$$ $\backslash )$ & $\backslash (\backslash$$ $\backslash )\backslash \backslash$

Dining Room Lighting Fixtures & $\backslash (\backslash$$ $\backslash )$ & $\backslash (\backslash$$ $\backslash )$

$\backslash$end$\{$tabular$\}$