Activity-Based Costing and Product Cost Distortion Four Finger Appliance Company manufactures small kitchen appliances. The product line consists of blenders and toaster ovens. Four Finger Appliance presently uses the multiple production department factory overhead rate method. The factory overhead is as follows: Assembly Department $186,000 Test and Pack Department 120,000 $306,000 Total The direct labor information for the production of 7,500 units of each product is as follows: Assembly Department Test and Pack Department 2,250 dlh Blender 750 dlh Toaster oven 2,250 750 3,000 dlh 3,000 dlh Total Four Finger Appliance used direct labor hours to allocate production department factory overhead to products. The management of Four Finger Appliance Company has asked you to use activity-based costing to allocate factory overhead costs to the two products. You have determined that $81,000 of factory overhead from each of the production departments can be associated with setup activity ($162,000 in total). Company records indicate that blenders required 135 setups, while the toaster ovens required only 45 setups. Each product has a production volume of 7,500 units. If required, round all per unit answers to the nearest cent. a. Determine the three activity rates (assembly, test and pack, and setup). X per dlh 18.60 Assembly Activity X per dlh 4.00 Test and Pack Activity X per setup 22.60 Setup Activity b. Determine the total factory overhead and factory overhead per unit allocated to each product using the activity rates in (a). Product Total Factory Overhead Factory Overhead Cost Per Unit 18.20 136,500 Blender 22.60 x 169,500 Toaster oven