Activity-based product costing 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 a activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows: Activity Production Setup Materials handling Inspection Product engineering Total Activity Cost Pool $259,200 55,000 9,750 60,000 123,200 $507,150 The activity bases identified for each activity are as follows: Activity Activity Base Production Machine hours Setup Number of setups Materials handling Number of parts Inspection Product engineering Number of inspection hours 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: Number of Number of Number of Inspection Machine Hours Setups Parts Hours Alpha 1,440 75 65 400 Beta 1,080 165 80 300 Number of Engineering Hours Units 125 1,800 175 1,350 Machine Hours Number of Number of Number of Inspection Number of Setups Parts Hours Engineering Hours Units Alpha 1,440 75 65 400 125 1,800 Beta 1,080 165 80 300 175 1,350 Omega 720 310 180 500 140 900 Total 3,240 550 325 1,200 440 4,050 Each product requires 40 minutes per unit of machine time. Required: If required, round all per unit amounts to the nearest cent. 1. Determine the activity rate for each activity. Production per machine hour Setup Materials handling Inspection Product engineering per setup per part per inspection hour per engineering hour 2. Determine the total and per-unit activity cost for all three products. Alpha Total Activity Cost Activity Cost Per Unit Beta Omega 3. Why aren't the activity unit costs equal across all three products since they require the same machine time per unit? The unit costs are different because the products consume many activities in ratios different from the