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Activity-Based Costing Zeus Industries manufactures two types of electrical power units, custom and standard, which involve four factory overhead activities--production setup, procurement, quality control, and
Activity-Based Costing Zeus Industries manufactures two types of electrical power units, custom and standard, which involve four factory overhead activities--production 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 $ 81,250 Number of setups Procurement 128,250 Number of purchase orders (PO) Quality control 189,000 Number of inspections Materials management 189,000 Number of components Total $587,500 The activity-base usage quantities for each product are as follows: Setups Purchase Orders Inspections Components Unit Volume Custom 500 1,150 2,300 500 2,000 Standard 150 200 400 400 2,000 Total 650 1,350 2,700 900 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 costs to the nearest cent. 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 the nearest cent. per unit
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