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		140,000		420,000		------
Prime costs		$9,800,000		$44,520,000		$54,320,000
Machine hours		140,000		700,000		840,000
Engineering hours		400		3,600		4,000
Receiving orders		400		1,200		1,600
Inspection hours		600		1,200		1,800
Overhead costs:
Machining		$10,920,000
Engineering		2,320,000
Receiving		560,000
Inspecting products		270,000

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. What if consumption ratios instead of activity rates were used to assigned costs? Show the cost assignment for the inspection activity.

	Cost assignment
Basic	$
Advanced	$