Activity$-$Based Product Costing

Davis Company produces two hair dryers: regular and deluxe. The company has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below.

Regular Deluxe Total

Units produced $110,000330,000$

Prime costs $$8,360,000$ $$33,000,000$ $$41,360,000$

Machine hours $110,000550,000660,000$

Engineering hours $2001,8002,000$

Receiving orders $200600800$

Inspection hours $9001,8002,700$

Overhead costs:

Machining $$9,900,000$

Engineering $1,060,000$

Receiving $248,000$

Inspecting products $459,000$

Required:

$1.$ Calculate the four activity rates.

Machining rate $fill in the blank $1$

$15$

per machine hour

Engineering rate $fill in the blank $2$

$530$

per hour

Receiving rate $fill in the blank $3$

$310$

per order

Inspecting rate $fill in the blank $4$

$170$

per hour

$2.$ Calculate the unit costs using activity rates. Round your answers to the nearest cent.

Unit cost

Regular $fill in the blank $5$

$1,971,000$

per unit

Deluxe $fill in the blank $6$

$9,543,000$

per unit

Calculate the overhead cost per unit. Round your answers to the nearest cent.

Overhead Cost

Regular $fill in the blank $7$

per unit

Deluxe $fill in the blank $8$

per unit

$3.$ 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

Regular $fill in the blank $9$