1 C D Meryl Manufacturing Company is a diversified manufacturer that manufactures three products (Sine, Cos and Tan) 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: Activities Production Setup $79,800 Activity Cost Pool $313,500 Activity Base Machine Hours (MH) Number of Setups Materials handling $14,800 Number of Parts Inspection $80,500 Number of Insp. Hours (IH) Product engineering $142,600 $631,200 Number of Eng. Hours (EH) The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows: Sine Cos Tan Total G " J K L M N P Number of MH Number of Setups Number of Parts Number of IH Number of EH Number of Units Produced 1,500 80 75 350 130 2,000 1,125 170 95 250 180 1,500 675 3,300 320 200 400 150 900 570 370 1,000 460 Each product requires 45 minutes per unit of machine time. Required: 1. Determine the activity rate for each activity. Round all per unit amounts to the nearest cent. Formula: Activity rate = Activity cost pool + Number of activity base Activities Activity Cost Pool Production Setup Materials handling Inspection Number of Activity Base Activity rate Product engineering 2. Determine the total and per-unit activity cost for all three products. Round all total costs to whole number and round all per unit amounts to the nearest cent. Formula: Activity-Base Usage x Activity rate from Req. (1) = Activity cost; Sum all activity costs per product to determine the total activity costs and Divide the total activity overhead by budgeted units to compute the activity costs per unit for each product. Products Sine Cos Tan Total Production Setup Materials handling Inspection Product engineering Total costs Unit cost 3. Why aren't the activity unit costs equal across all three products since they require the same machine time per unit