Question
Activity rates and product costs using activity-based cost Idris Inc. manufactures entry and dining room lighting fixtures. Five activities are used in manufacturing the
Activity rates and product costs using activity-based cost Idris Inc. manufactures entry and dining room lighting fixtures. Five activities are used in manufacturing the fixtures. These activities and their associated budgeted activity costs and activity bases are as follows: Activity Casting Assembly Inspecting Setup Materials handling Budgeted Activity Cost Activity Base $269,410 Machine hours 201,210 Direct labor hours 31,200 Number of inspections. 36,400 Number of setups 47,940 Number of loads Corporate records were obtained to estimate the amount of activity to be used by the two products. The estimated activity-base usage quantities and units produced follow: Activity Base Entry Dining Total Machine hours 4,920 4,370 9,290 Direct labor hours 4,240 6,350 10,590 Number of inspections 1,480 470 1,950 Number of setups 210 50 260 Number of loads 740 200 940 Units produced 9,800 4,900 14,700 a. Determine the activity rate for each activity. If required, round the rate to the nearest dollar. Machine hours 4,920 4,370 9,290 Direct labor hours 4,240 6,350 10,590 Number of inspections 1,480 470 1,950 Number of setups 210 50 260 Number of loads 740 200 940 Units produced 9,800 4,900 14,700 a. Determine the activity rate for each activity. If required, round the rate to the nearest dollar. Activity Casting Assembly Inspecting Setup Activity Rate per machine hour per direct labor hour per inspection per setup Materials handling per load b. Use the activity rates in (a) to determine the total and per-unit activity costs associated with each product. Round the per unit amounts to the nearest cent. Product Entry Lighting Fixtures Total Activity Cost Activity Cost Per Unit Dining Room Lighting Fixtures
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