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Activity-Based Product Costing Davis Company produces two hair dryers: regular and deluxe. The company has four activities: machining, engineering, receiving, and inspection. Information on these
Activity-Based Product Costing
Davis Company produces two hair dryers: regular and deluxe. The company has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below.
Regular | Deluxe | Total | ||||
Units produced | 100,000 | 300,000 | ||||
Prime costs | $7,000,000 | $35,400,000 | $42,400,000 | |||
Machine hours | 100,000 | 500,000 | 600,000 | |||
Engineering hours | 200 | 1,800 | 2,000 | |||
Receiving orders | 300 | 900 | 1,200 | |||
Inspection hours | 1,000 | 2,000 | 3,000 | |||
Overhead costs: | ||||||
Machining | $9,000,000 | |||||
Engineering | 1,200,000 | |||||
Receiving | 480,000 | |||||
Inspecting products | 450,000 |
Required:
1. Calculate the four activity rates.
Machining rate | $fill in the blank 1 per machine hour |
Engineering rate | $fill in the blank 2 per hour |
Receiving rate | $fill in the blank 3 per order |
Inspecting rate | $fill in the blank 4 per hour |
2. Calculate the unit costs using activity rates. Round your answers to the nearest cent.
Unit cost | |
Regular | $fill in the blank 5 per unit |
Deluxe | $fill in the blank 6 per unit |
Calculate the overhead cost per unit. Round your answers to the nearest cent.
Overhead Cost | |
Regular | $fill in the blank 7 per unit |
Deluxe | $fill in the blank 8 per unit |
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