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Activity-Based Costing Pure Cane Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) in a continuous production process. Senior management has asked
Activity-Based Costing Pure Cane Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows: Activity Activity Costs Production $247, 500 Setup 48,000 Inspection 12, 500 Shipping 69, 300 Customer service 27, 600 Total $404, 900 The activity bases identified for each activity are as follows: Activity Activity Base Production Machine hours Setup Number of setups Inspection Number of inspections Shipping Number of customer orders Customer service Number of customer service requests The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows; Machine Hours Number of Setups Number of Inspections Number of Customer Orders Number of Customer Service Requests Units White sugar 2,000 50 100 410 25 8,000 Brown sugar 1, 250 70 160 1, 100 200 5,000 Powdered sugar 1, 250 80 240 800 120 5,000 Total 4, 500 200 500 2, 310 345 18,000 Each product requires 0.25 machine hour per unit. Required: Determine the activity rate for each activity. Activity Rate Production $______________/mh Setup $______________/setup Inspection $______________/insp. Shipping $____________/cust. ord. Customer Service $ __________/req. Determine the total and per-unit activity costs for all three products. Round "Activity cost per unit" answers to two decimal places. White Sugar Brown Sugar Powdered Sugar Total activity cost $__________ $ ____________ $__________ Activity cost per $__________ $ ____________ $__________ unit
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