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	Budgeted Activity Cost		Activity Base
Casting	$283,360		Machine hours
Assembly	196,180		Direct labor hours
Inspecting	31,220		Number of inspections
Setup	36,720		Number of setups
Materials handling	51,480		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	5,360		4,760		10,120
Direct labor hours	4,620		6,920		11,540
Number of inspections	1,690		540		2,230
Number of setups	220		50		270
Number of loads	780		210		990
Units produced	10,600		5,300		15,900

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 28 per machine hour Assembly 17 per direct labor hour Inspecting *** 14 per inspection Setup 136 per setup Materials handling 52 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 Total Activity Cost Activity Cost Per Unit Entry Lighting Fixtures 322,760 30.4 x Dining Room Lighting Fixtures 276,200 54.4 x