Activity-Based Product Costing Sweet Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) in a continuous production proces 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 $476,100 Setup 179,600 Inspection 114,400 Shipping 164,000 Customer service 49,200 Total 5983,300 The activity bases identified for each activity are as follows: Activity Activity Base Production Machine hours Setup Number of setups Inspection Number of inspections 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 Number of Number of Customer Number of Service Setups Customer Orders Machine Hours Inspections Requests Units W Sugar 3,040 100 260 800 407,600 Brown sugar 1,930 390 2,200 250 4.825 Powdered sugar 1,930 650 1,000 110,925 150 150 cuook TACCIVILE Production ACCIVILY Base Machine hours Setup Number of setups Inspection Number of inspections 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 Number of Number of Number of Service Setups Machine Hours Customer Orders Inspections Requests Units White sugar 3,040 100 260 800 407,600 Brown sugar 1,930 150 390 2,200 250 4.825 Powdered sugar 150 650 1,000 110 4,825 Total 6,900 400 1,300 4,000 400 17,250 1,930 Each product requires 0.9 machine hour per unit Required: If required, round all per unit amounts to the nearest cent. Exam 2 Extra Point Opportur 1. Determine the activity rate for each activity Production per machine hour Setup per setup Inspection Shipping per move per cust. ord Customer service per customer service request 2. Determine the total and per-unit activity cost for all three products Total activity. Cost activitunut perlinit Weinboard Hepage - Principles of eBook CengageNOWV2 Online White sugar Brown sugar Number of Customer Number of Number of Setups Service Machine Hours Customer Orders Inspections Requests Units 3,040 100 800 407,600 1,930 150 390 2,200 250 4,825 Powdered sugar 1,930 150 650 1,000 110 4,825 Total 6,900 400 1,300 4,000 400 17.250 Each product requires 0.9 machine hour per unit. 260 Required: If required, round all per unit amounts to the nearest cent. 1. Determine the activity rate for each activity Production per machine hour Setup per setup Inspection per move Shipping per cust. ord. Customer service 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
