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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

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 110,000 330,000
Prime costs $7,700,000 $34,320,000 $42,020,000
Machine hours 110,000 550,000 660,000
Engineering hours 400 3,600 4,000
Receiving orders 400 1,200 1,600
Inspection hours 1,000 2,000 3,000
Overhead costs:
Machining $5,940,000
Engineering 2,320,000
Receiving 592,000
Inspecting products 330,000

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 $

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