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 $404,700 Setup 171,200 Inspection 121,600 Shipping 163,400 Customer service 54,000 Total $914,900 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 Units Setups Inspections Customer Orders Machine Hours Requests White sugar 3,120 100 320 860 40 7,800 Brown sugar 1,990 150 480 2,370 250 4,975 Powdered sugar 1,990 150 800 1,070 110.4.975 Customer Number of Number of Number of Service Units Setups Inspections Customer Orders Machine Hours Requests White sugar 3,120 100 320 860 40 7,800 Brown sugar 1,990 150 480 2,370 250 4,975 Powdered sugar 1,990 150 800 1,070 110 4,975 Total 7,100 400 1,600 4,300 400 17,750 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 57 per machine hour Setup 428 per setup Inspection 76 per move Shipping 38 per cust. ord. Customer service 135 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