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 $435,500 Setup 123,000 Inspection 126,000 Shipping 180,400 Customer service 61,500 Total $926,400 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 White sugar 2,950 80 300 880 50 7,375 Brown sugar 1,880 110 450 2,420 320 4,700 Powdered sugar 1,870 110 750 1,100 130 4,675 Total 6,700 300 1,500 4,400 500 16,750 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 per machine hour Setup per setup $ Inspection 09 per move Shipping S 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