1. 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			$444,600
   Setup			132,000
   Inspection			121,600
   Shipping			117,600
   Customer service			59,500
   	Total		$875,300

   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:

   			Machine Hours		Number of Setups		Number of Inspections		Number of Customer Orders		Customer Service Requests		Units
   White sugar			3,430		80		320		840		50		8,575
   Brown sugar			2,180		110		480		2,310		320		5,450
   Powdered sugar			2,190		110		800		1,050		130		5,475
   	Total		7,800		300		1,600		4,200		500		19,500

   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	$fill in the blank 1 per machine hour
   Setup	$fill in the blank 2 per setup
   Inspection	$fill in the blank 3 per move
   Shipping	$fill in the blank 4 per cust. ord.
   Customer service	$fill in the blank 5 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	$fill in the blank 6	$fill in the blank 7
   Brown sugar	fill in the blank 8	fill in the blank 9
   Powdered sugar	fill in the blank 10	fill in the blank 11

   3. Why arent 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 .