Question
A producer of two different weed eaters: basic and advanced has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers
A producer of two different weed eaters: basic and advanced has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below.
Basic | Advanced | Total | ||||
Units produced | 100,000 | 300,000 | ||||
Prime costs | $7,600,000 | $32,400,000 | $40,000,000 | |||
Machine hours | 100,000 | 500,000 | 600,000 | |||
Engineering hours | 400 | 3,600 | 4,000 | |||
Receiving orders | 500 | 1,500 | 2,000 | |||
Inspection hours | 800 | 1,600 | 2,400 | |||
Overhead costs: | ||||||
Machining | $9,000,000 | |||||
Engineering | 1,600,000 | |||||
Receiving | 640,000 | |||||
Inspecting products | 480,000 |
Required:
1. Calculate the four activity rates.
Machining rate | |
Engineering rate | |
Receiving rate | |
Inspecting rate |
2. Calculate the unit costs using activity rates. Round your answers to the nearest cent.
Unit cost | |
Basic | |
Advanced |
Calculate the overhead cost per unit. Round your answers to the nearest cent.
Overhead Cost | |
Basic | |
Advanced |
3. If consumption ratios instead of activity rates were used to assign costs instead of activity rates, show the cost assignment for the inspection activity.
Cost assignment | |
Basic | |
Advanced |
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