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 TotalUnits produced 150,000 450,000 Prime costs $11,700,000 $45,900,000 $57,600,000Machine hours 150,000 750,000 900,000Engineering hours 400 3,600 4,000Receiving orders 300 900 1,200Inspection hours 900 1,800 2,700 Overhead costs: Machining $9,900,000 Engineering 2,320,000 Receiving 252,000 Inspecting products 297,000

Required:

1. Calculate the four activity rates.

Machining rate$fill in the blank per machine hourEngineering rate$fill in the blank per hourReceiving rate$fill in the blank per orderInspecting rate$fill in the blank per hour

2. Calculate the unit costs using activity rates. Round your answers to the nearest cent.

Unit costRegular$fill in the blank per unitDeluxe$fill in the blank per unit

Calculate the overhead cost per unit. Round your answers to the nearest cent.

Overhead CostRegular$fill in the blank per unitDeluxe$fill in the blank per unit

3. If consumption ratios instead of activity rates were used to assign costs instead of activity rates, show the cost assignment for the inspection activity.

Cost assignmentRegular$fill in the blank Deluxe$fill in the blank