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 $380,800 Setup 304,500 Inspection 75,000 Shipping 151,200 Customer service 50,400 Total $961,900 > 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: Customer Number of Number of Number of Service Setups Customer Orders Machine Hours Inspections Requests Units 2,990 180 200 720 40 7,475 White sugar Check My Work Assignment 9-Homework 180 Machine Hours White sugar 2,990 Brown sugar 1,900 Powdered sugar 1,910 Total 6,800 Number 01 Service Setups Customer Orders Inspections Requests Units 200 720 40 7,475 270 300 1,980 250 4,750 250 500 900 110 4,775 700 1,000 3,600 400 17,000 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 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 volume Check My Work Previous Next