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Activity Rates and Product Costs using Activity-Based Costing Lonsdale Inc. manufactures entry and dining room lighting fixtures. Five activities are used in manufacturing the
Activity Rates and Product Costs using Activity-Based Costing Lonsdale 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 Budgeted Activity Cost Activity Base $570,000 Machine hours 80,000 Direct labor hours 42,000 Number of inspections 38,000 Number of setups 23,750 Number of loads Materials handling 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 6,000 13,000 19,000 Direct labor hours. 3,000 2,000 5,000 Number of inspections 600 400 1,000 Number of setups 300 200 500 Number of loads 450 500 050 Units produced 6,000 3,000 9,000 a. Determine the activity rate for each activity. Activity Activity Rate Casting 30 per machine hour Assembly 16 per direct labor hour Inspecting 42 per inspection 763 not setun Previous Direct labor hours 3,000 2,000 5,000 Number of inspections 600 400 1,000 Number of setups 300 200 500 Number of loads 450 500 950 Units produced 6,000 3,000 9,000 a. Determine the activity rate for each activity. Activity Casting Assembly Inspecting Setup Activity Rate 30 per machine hour 16 per direct labor hour 42 per inspection 76 per setup 25 per load Materials handling 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. Total Activity Cost Activity Cost Per Unit Product Entry Lighting Fixtures Dining Room Lighting Fixtures.
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