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 $442,000 Setup 125,400 Inspection 117,600 Shipping 147,600 Customer service 63,000 Total $895,600 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 2,990 80 280 820 50 7,475 Brown sugar 1,900 110 420 2,260 320 4,750 Powdered sugar 1,910 110 700 1,020 130 4,775 Total 6,800 300 1,400 4,100 500 17,000 Each product requires 0.9 machine hour per unit. Required: If required, round all per unit amounts to the nearest cent. VI VI 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 sales mix