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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 $307,520 Machine hours Casting Assembly 158,340 Direct labor hours Inspecting 22,220 Number of inspections Setup 43,400 Number of setups Materials handling 37,200 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: Entry Dining Total Activity Base Machine hours Direct labor hours 5,260 4,660 9,920 4,520 6,790 11,310 Number of inspections 1,540 480 2,020 Number of setups 250 60 310 Number of loads 730 200 930 Units produced 10,400 5,200 15,600 a. Determine the activity rate for each activity. If required, round the rate to the nearest dollar. Activity Activity Rate Casting $ 31 per machine hour Assembly $ 14 per direct labor hour Inspecting $ 11 per inspection Setup 140 per setup Materials handling 40 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 307,480 Entry Lighting Fixtures Dining Room Lighting Fixtures
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