1. Activity-Based Costing

   Zeus Industries manufactures two types of electrical power units, custom and standard, which involve four factory overhead activitiesproduction setup, procurement, quality control, and materials management. An activity analysis of the overhead revealed the following estimated activity costs and activity bases for these activities:

   Activity	Activity Cost		Activity Base
   Production setup	$ 44,000		Number of setups
   Procurement	13,500		Number of purchase orders (PO)
   Quality control	97,500		Number of inspections
   Materials management	84,000		Number of components
   Total	$239,000

   The activity-base usage quantities for each product are as follows:

   	Setups		Purchase Orders		Inspections		Components		Unit Volume
   Custom	290		760		1,200		500		2,000
   Standard	110		140		300		200		2,000
   Total	400		900		1,500		700		4,000

   a. Determine an activity rate for each activity.

   Activity Rates	Production Setup		Procurement		Quality Control		Materials Management
   Activity cost	$		$		$		$
   Activity base
   Activity rate	$	/setup	$	/PO	$	/inspection	$	/component

   b. Assign activity costs to each product and determine the unit activity cost, using the activity rates from part (a). Round unit cost to two decimal places.

   	Custom		Standard
   Setups Total	$		$
   Purchase Orders Total
   Inspections Total
   Components Total
   Total product cost	$		$
   Unit volume
   Unit cost	$		$

   c. Assume that each product required one direct labor hour per unit. Determine the per-unit cost if factory overhead is allocated on the basis of direct labor hours. Round your answer to two decimal places. $per unit

   d. The custom product will consume materials management activities than will the standard product.