Question
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 Budgeted Activity Cost Activity Base Assembly Inspecting Setup $214,130 Machine hours 148,540 Direct labor hours 26,510 Number of inspections 45,120 Number of setups 48,300 Number of loads Materials handling Corporate records were obtained to estimate the amount of activity to be used by the two products. The estimated 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 4,930 4,380 9,310 Direct labor hours 4,240 6,370 10,610 Number of inspections 1,830 580 2,410 Number of setups 260 60 320 Number of loads 830 220 1,050 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 Activity Rate Casting Assembly Inspecting Setup Materials handling per machine hour per direct labor hour per inspection per setup 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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