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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
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 Setup Inspection Shipping Customer service Total Budgeted Activity Cost $501,600 279,300 93,500 127,100 78,600 $1,080,100 The activity bases identified for each activity are as follows: Activity Activity Base Production Machine hours Setup Number of setups Inspection Shipping Number of inspections 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 Machine Hours Number of Inspections Number of Customer Orders Customer Service Requests Units White sugar 3,340 180 220 820 60 8,350 Brown sugar 2,130 270 330 2,260 380 5,325 Powdered sugar 2,130 250 550 1,020 160 5,325 Total 7,600 700 1,100 4,100 600 19,000 Each product requires 0.9 machine hour per unit.
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