Question
Atlanta Systems produces two different products, Product A, which sells for $500 per unit, and Product B, which sells for $900 per unit, using
Atlanta Systems produces two different products, Product A, which sells for $500 per unit, and Product B, which sells for $900 per unit, using three different activities: Design, which uses Engineering Hours as an activity driver, Machining, which uses machine hours as an activity driver, and Inspection, which uses number of batches as an activity driver. The cost of each activity and usage of the activity drivers are as follows: Check my work Design (Engineering Hours) Machining Machine Hours) Inspection (Batches) Cost $ 200,000 $2,000,000 $ 180,000 Usage by Product A 110 2,200 40 Usage by Product B 140 2,000 48 Atlanta manufactures 12.500 units of Product A and 8,444 units of Product B per month. Each unit of Product A uses $100 of direct materials and $45 of direct labor, while each unit of Product B uses $140 of direct materials and $75 of direct labor. Required: a. Calculate the activity rate for design. Rate for Design 800 per hour b. Calculate the activity rate for machining. Rate for Machining $ 400 per hour
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