Activity-Based Product Costing

Roberts Company produces two weed eaters: basic and advanced. The company has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below.

		Basic		Advanced		Total
Units produced		150,000		450,000
Prime costs		$11,700,000		$45,000,000		$56,700,000
Machine hours		150,000		750,000		900,000
Engineering hours		400		3,600		4,000
Receiving orders		500		1,500		2,000
Inspection hours		1,000		2,000		3,000
Overhead costs:
Machining		$10,800,000
Engineering		2,080,000
Receiving		660,000
Inspecting products		420,000

Required:

1. Calculate the four activity rates.

Machining rate	$ per machine hour
Engineering rate	$ per hour
Receiving rate	$ per order
Inspecting rate	$ per hour

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

	Unit cost
Basic	$ per unit
Advanced	$ per unit

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

	Overhead Cost
Basic	$ per unit
Advanced	$ 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 assignment
Basic	$
Advanced	$