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		130,000		390,000
Prime costs		$9,620,000		$41,340,000		$50,960,000
Machine hours		130,000		650,000		780,000
Engineering hours		300		2,700		3,000
Receiving orders		200		600		800
Inspection hours		1,000		2,000		3,000
Overhead costs:
Machining		$7,800,000
Engineering		1,410,000
Receiving		200,000
Inspecting products		390,000

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	$