Activity-based product costing Instructions Activity Table - Alpha Activity Table - Beta Activity Table - Omega Final Question Instructions Mello Manufacturing Company is a diversified manufacturer that manufactures three products (Alpha, Beta, and Omega) 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: 1 2 Production 3 Setup 4 Material handling 5 Inspection 6 Product engineering Total Activity The activity bases identified for each activity are as follows: Activity Activity Base Production Machine hours Setup Number of setups Material handling Inspection Number of parts Number of inspection hours Product engineering Number of engineering hours Activity Cost Pool $238,830.00 96,585.00 9.660.00 52,364.00 171,622.00 $569,061.00 The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows: Check My Work Previou Instructions Activity Table - Alpha Activity Table - Beta Activity Table - Omega Final Question Instructions Production Setup Machine hours Number of setups Material handling Number of parts Inspection Number of inspection hours Product engineering Number of engineering hours The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows: Machine Number of Number of Number of Number of Hours Setups Parts Inspection Hours Engineering Hours Units Alpha 901 62 73 428 134 1,245 Beta 773 117 156 313 191 918 Omega 421 232 254 247 213 520 Total 2,095 411 483 988 538 2,683 Each product requires 40 minutes per unit of machine time. Required: Complete the Activity Tables for Alpha, Beta and Omega. 1. Determine the activity rate for each activity.* 2. Use the activity rates in (1) to determine the total and per-unit activity costs associated with all three products 3. Why aren't the activity unit costs equal across all three products since they require the same machine time per unit? *If required, round all per-unit amounts to the nearest cent Instructions Activity Table - Alpha Activity Table - Beta Activity Table - Omeca Final Question Activity Table - Alpha Complete the Activity Table for Alpha. 1. Determine the activity rate for each activity. Enter these rates in the Activity Rate columns." 2. Use the activity rates in (1) to determine the total and per-unit activity costs associated with Alpha *If required, round all per-unit amounts to the nearest cent Activity- Activity Base Usage Production Setup Material handling Inspection Product Engineering Total activity cost Number of units Activity cost per unit X $ $ $ $ Alpha Activity Activity Rate Cost $ $ S $ Instructions Activity Table - Beta Levitrada Activity Table - Beta Complete the Activity Table for Beta Determine the activity rate for each activity Enter these rates in the Activity Rate columns 2. Use the activity rates into determine the total and per-unit activity costs associated with Beta. "if required round all per-unit amounts to the nearest cent Activity Activity- Production Setup Material handling Inspection Product Engineering Total activity cost Number of units Activity cost per unit Beta Base Activity Activity Usage X Rate Cost S $ 3 $ $ Instructions Activity Table - Alpha Activity Table -Beta Activity Table - Omega Final Queston Activity Table - Omega Complete the Activity Table for Omega. 1. Determine the activity rate for each activity Enter these rates in the Activity Rate columns. 2. Use the activity rates in (1) to determine the total and per-unit activity costs associated with Omega.* *If required, round all per-unit amounts to the nearest cent Activity- Activity Base Usage X Production Setup Material handling Inspection Product Engineering Total activity cost Number of units Activity cost per unit Omega Activity Activity Rate Cost $ $ $ $ $ $ $ S Instructions Activity Table - Alpha Activity Table - Beth Activity Table-Dinica Final Question Final Question X 3. Why aren't the activity unit costs equal across all three products since they require the same machine time per unit? The difference is due to product cost distortions. The difference is because the products consume many activities in ratios different from the volume. The difference is due to machine inefficiencies.