Question
Activity Rates and Activity-Based Product Costing Hammer Company produces a variety of electronic equipment. One of its plants produces two laser printers: the deluxe and
Activity Rates and Activity-Based Product Costing
Hammer Company produces a variety of electronic equipment. One of its plants produces two laser printers: the deluxe and the regular. At the beginning of the year, the following data were prepared for this plant:
Deluxe | Regular | |
Quantity | 100,000 | 800,000 |
Selling price | $900 | $750 |
Unit prime cost | $529 | $483 |
In addition, the following information was provided so that overhead costs could be assigned to each product:
Activity Name | Activity Driver | Deluxe | Regular | Activity Cost |
Setups | Number of setups | 300 | 200 | $2,050,000 |
Machining | Machine hours | 100,000 | 300,000 | 40,000,000 |
Engineering | Engineering hours | 50,000 | 100,000 | 15,000,000 |
Packing | Packing orders | 100,000 | 400,000 | 250,000 |
Required:
1. Calculate the overhead rates for each activity. If required, carry your answers out to the nearest cent.
Setups | $ per setup |
Machining | $ per machine hour |
Engineering | $ per engineering hour |
Packing | $ per packing order |
2. Calculate the per-unit product cost for each product. Round your answers to the nearest whole dollar.
Deluxe | $per unit |
Regular | $per unit |
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