1. Lemmons Inc. has the following two activities: (1) Retesting reworked products, cost: $720,000. The retesting cost of the most efficient competitor is $225,000. (2) Welding subassemblies, cost: $1,350,000 (67,500 welding hours). A benchmarking study reveals that the most efficient level for Lemmons would use 54,000 welding hours and entail a cost of $1,080,000. Determine the nonvalue-added cost of each activity (resting and weilding).

2. Cinturas Company produces two types of mens shirts: casual and formal. There are four activities associated with the two products. Drivers for the four activities are as follows:

	Casual			Formal
Cutting hours	12,000			18,000
Sewing hours	3,000			7,000
Inspection hours	2,000			4,000
Rework hours	400			600

The following activity data have been collected:

Cutting	$90,000
Sewing	100,000
Inspecting	36,000
Reworking	20,000

Calculate the activity rates that would be used to assign costs to each product.

3. Limpio Company produces dishwashers for 36 retail outlets. Of the 36 retail outlets, 34 are small, separately owned appliance stores and two are large retail chains. The two large retailers buy 80% of the dishwashers produced. The 34 smaller customers purchase dishwashers in approximately equal quantities, where the orders are about the same size. Data concerning Limpios customer activity are as follows:

	Large Retailer		Smaller Retailers
Units purchased	60,000		15,000
Orders placed	20		1,500
Number of sales calls	8		816
Manufacturing costs	$4,500,000		$1,125,000
Order filling costs allocated*	$646,400		$161,600
Sales force costs allocated*	$320,000		$80,000
*Currently allocated on sales volume (units sold).

Currently, customer-driven costs are assigned to customers based on units sold, a unit-level driver.

Assign costs to customers by using an ABC approach. Round your answers and all intermediate calculations to the nearest dollar.

ordr filing rate. selling call rate,

cost assignment: large retailer small retailer

4.

Patten Company uses activity-based costing (ABC). Patten manufactures toy cars using two activities: plastic injection molding and decal application. Pattens 20X1 total budgeted overhead costs for these two activities are $675,000 (80% for injection molding and 20% for decal application). Molding overhead costs are driven by the number of pounds of plastic that are molded together. Decal application overhead costs are driven by the number of decals applied to toys. The budgeted activity data for 20X1 are as follows:

Pounds of plastic molded	3,000,000
Number of decals applied	375,000

a. Calculate the activity rate for the plastic injection molding activity (round to two decimal places). per pound molded

b. Calculate the activity rate for the decal application activity (round to two decimal places). per decal