Activity Rates and Product Costs using Activity-Based Costing

Garfield 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	Budgeted Activity Cost		Activity Base
Casting	$319,920		Machine hours
Assembly	235,200		Direct labor hours
Inspecting	47,260		Number of inspections
Setup	39,520		Number of setups
Materials handling	50,760		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	5,470		4,850		10,320
Direct labor hours	4,700		7,060		11,760
Number of inspections	2,110		670		2,780
Number of setups	210		50		260
Number of loads	850		230		1,080
Units produced	10,800		5,400		16,200

a. Determine the activity rate for each activity. If required, round the rate to the nearest dollar.

a. Determine the activity rate for each activity. If required, round the rate to the nearest dollar. Activity Activity Rate Casting per machine hour Assembly per direct labor hour Inspecting per inspection $ $ Setup 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 rates to the nearest cent. Total Activity Cost Activity Cost Per Unit Product Entry Lighting Fixtures Dining Room Lighting Fixtures