activity based product costing

Activity-Based Product Costing 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 $423,400 Setup 244,800 Inspection 123,200 Shipping 125,800 Customer service 65,500 Total $982,700 The activity bases identified for each activky 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: Customer Number of Number of Number of Service Units Setups Inspections Customer Orders Requests Machine Hours White sugar 3,210 150 320 740 50 8,025 Brown sugar 2,040 230 480 2,040 320 5,100 Powdered sugar 2,050 220 800 920 130 5,125 Total 7,300 600 1,600 3,700 500 18,250 Each product requires 0.9 machine hour per unit. Required: If required, round all per unit amounts to the nearest cent. 1. Determine the activity rate for each activity, Production per machine hour Setup per setup Inspection per move Shipping per cust. ord. Customer service per customer service request 2. Determine the total and per-unit activity cost for all three products. Total Activity Cost Activity Cost Per Unit White sugar Brown sugar Powdered sugar 3. Why aren't the activity unit costs equal across all three products since they require the same machine time per unit? The unit costs are different because the products consume many activities in ratios different from the