Additionally, the following overhead activity costs are reported:

Facility$-$level costs are allocated in proportion to machine hours $($provides a measure of time

the facility is used by each product$).$ Materials handling uses three inputs: two forklifts, gasoline

to operate the forklifts, and three operators. The three operators are paid a salary of $$40,000$ each.

The operators spend $25$ percent of their time on the receiving activity and $75$ percent on moving

goods $($materials handling$).$ Gasoline costs $$3$ per move. Depreciation amounts to $$6,000$ per

forklift per year.

Required:

Round answers to two decimal places.

Calculate the cost of the materials handling activity. Label the cost assignments as driver

tracing or direct tracing. Identify the resource drivers.

Calculate the cost per unit for each product by using direct labour hours to assign all over$-$

head costs.

Calculate activity rates, and assign costs to each product. Calculate a unit cost for each

product, and compare these costs with those calculated in Requirement $2.$

Calculate consumption ratios for each activity.

Explain how the consumption ratios calculated in Requirement $4$ can be used to reduce the

number of rates. Calculate the rates that would apply under this approach.