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 Production Budgeted Activity Cost $399,600 Setup Inspection Shipping Customer service Total 262,800 109,500 129,200 56,500 $957,600 The activity bases identified for each activity are as follows: Activity Production Activity 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: Number of Setups Customer Number of Number of Inspections Customer Orders Service Requests Units Machine Hours Inspections White sugar 3,260 150 300 760 Requests Units 50 8,150 Brown sugar 2,070 2301 450 2,090 320 5,175 Powdered sugar 2,070 220 750 950 130 5,175 Total 7,400 600 1,500 3,800 500 18,500 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 Setup Inspection Shipping Customer service $8 per machine hour per setup per move per cust. ord. per customer service request 2. Determine the total and per-unit activity cost for all three products. White sugar Brown sugar Total Activity Cost Activity Cost Per Unit 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