Activity-Based Product Costing Sweet Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows: Activity Budgeted Activity Cost Production $395,300 Setup 150,000 Inspection 93,600 Shipping 151,200 Customer service 57,000 Total $847,100 The activity bases identified for each activity are as follows: Activity Activity Base Production Machine hours Setup Number of setups Number of inspections Inspection Shipping Number of customer orders Customer service Number of customer service requests The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows: Customer Customer Number of Number of Number of Service Setups Customer Orders Machine Hours Inspections Requests Units 2,950 100 240 840 50 7,375 Brown sugar 1,880 150 360 2,310 320 4,700 Powdered sugar 1,870 150 600 1,050 130 4,675 Total 6,700 400 1,200 4,200 500 16,750 White sugar Each product requires 0.9 machine hour per unit. Required: If required, round all per unit amounts to the nearest cent. 1. Determine the activity rate for each activity. Production 59 per machine hour Setup 375 per setup Inspection 78 per move Shipping $ 36 per cust. ord. Customer service 114 per customer service request 2. Determine the total and per-unit activity cost for all three products. Total Activity Cost Activity Cost Per Unit White sugar Brown sugar Powdered sugar 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 volume