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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 fixtures.

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 $352,000 Machine hours
Assembly 85,500 Direct labor hours
Inspecting 33,600 Number of inspections
Setup 36,000 Number of setups
Materials handling 29,450 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 5,050 10,950 16,000
Direct labor hours 2,700 1,800 4,500
Number of inspections 210 840 1,050
Number of setups 240 160 400
Number of loads 240 710 950
Units produced 3,700 3,800 7,500

  1. 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
  2. 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.

    Product Total Activity Cost Activity Cost Per Unit
    Entry Lighting Fixtures $ $
    Dining Room Lighting Fixtures $ $

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