Activity$-$Based Product Costing

Obj. $4$ Mello Manufacturing Company is a diversified manufacturer that manufactures

three products $($Alpha$,$ Beta, and Omega$)$ 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:

The activity bases identified for each activity are as follows:

The activity$-$base usage quantities and units produced for the three products were

determined from corporate records and are as follows:

Each product requires $40$ minutes per unit of machine time.

Instructions

Determine the activity rate for each activity.

Determine the total and per$-$unit activity cost for all three products. Round to nearest cent.

Answer darr

Check Figure: Alpha total activity cost, $$179,650$

Why aren't the activity unit costs equal across all three products since they

require the same machine time per unit?