Activity-based product costing OBJ. 4 Sweet Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) 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:

Activity Budgeted Activity Cost Production $500,000 Setup 144,000 Inspection 44,000 Shipping 115,000 Customer service 84,000 __________ Total $887,000 __________ __________ The activity bases identified for each activity are as follows:

Activity Activity Base Production Machine hours Setup Number of setups Inspection Number of inspections Shipping Number of customer orders Customer service Number of customer service requests The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows:

Machine Number of Number of Customer Service Hours Setups Inspections Orders Requests Units White sugar 5,000 85 220 1,150 60 10,000 Brown sugar 2,500 170 330 2,600 350 5,000 Powdered sugar 2,500 195 550 2,000 190 5,000 ______ ___ _____ _____ ___ _____ Total 10,000 450 1,100 5,750 600 20,000 ______ ______ ___ ___ _____ _____ _____ _____ ___ ___ _____ _____ Each product requires 0.5 machine hour per unit.
Instructions 1. Determine the activity rate for each activity.
2. Determine the total and per-unit activity cost for all three products. Round to two decimal places.
3. Why aren’t the activity unit costs equal across all three products since they require the same machine time per unit?