CH18 HW #3

Mello Manufacturing Company is a diversified manufacturer that manufactures three products (Alpha, Beta, and Omega) 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: 1 Activity Activity Cost Pool 2 Production $270,840.00 3 Setup 98,945.00 4 Material handling 10,604.00 5 Inspection 44,100.00 6 Product engineering 139,380.00 7 Total $563,869.00 The activity bases identified for each activity are as follows: Activity Activity Base Production Machine hours Setup Number of setups Material handling Number of parts Inspection Number of inspection hours Product engineering Number of engineering hours The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows: Machine Number of Number of Number of Number of Hours Setups Parts Inspection Hours Engineering Hours Units Alpha 1,061 55 84 467 130 1,341 Beta 767 125 158 281 183 927 Omega 392 205 240 232 192 542 Total 2,220 385 482 980 505 2,810 Each product requires 40 minutes per unit of machine time. Required: Complete the Activity Tables for Alpha, Beta and Omega. 1. Determine the activity rate for each activity.* 2. Use the activity rates in (1) to determine the total and per-unit activity costs associated with all three products.*

Mello Manufacturing Company is a diversified manufacturer that manufactures three products (Alpha, Beta, and Omega) 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: The activity bases identified for each activity are as follows: The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows: Each product requires 40 minutes per unit of machine time. Required: Complete the Activity Tables for Alpha, Beta and Omega. 1. Determine the activity rate for each activity. * 2. Use the activity rates in (1) to determine the total and per-unit activity costs associated with all three products. * 3. Why aren't the activity unit costs equal across all three products since they require the same machine time per unit? *If required, round all per-unit amounts to the nearest cent. Complete the Activity Table for Alpha. 1. Determine the activity rate for each activity. Enter these rates in the Activity Rate columns. * 2. Use the activity rates in (1) to determine the total and per-unit activity costs associated with Alpha. * *If required, round all per-unit amounts to the nearest cent. Complete the Activity Table for Beta. 1. Determine the activity rate for each activity. Enter these rates in the Activity Rate columns. * 2. Use the activity rates in (1) to determine the total and per-unit activity costs associated with Beta. * *If required, round all per-unit amounts to the nearest cent. Complete the Activity Table for Omega. 1. Determine the activity rate for each activity. Enter these rates in the Activity Rate columns. * 2. Use the activity rates in (1) to determine the total and per-unit activity costs associated with Omega. * *If required, round all per-unit amounts to the nearest cent