Question
Cornerstone Exercise 4.5 (Algorithmic) Activity-Based Product Costing Roberts Company produces two weed eaters: basic and advanced. The company has four activities: machining, engineering, receiving, and
Cornerstone Exercise 4.5 (Algorithmic)Activity-Based Product Costing
Roberts Company produces two weed eaters: basic and advanced. The company has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below.
BasicAdvancedTotalUnits produced80,000240,000------
Prime costs$6,720,000$27,360,000$34,080,000
Machine hours80,000400,000480,000
Engineering hours5004,5005,000
Receiving orders200600800
Inspection hours8001,6002,400
Overhead costs:Machining$7,200,000Engineering2,250,000Receiving192,000Inspecting products336,000
Required:
1. Calculate the four activity rates.
Machining rate$ per machine hourEngineering rate$ per hourReceiving rate$ per orderInspecting rate$ per hour
2. Calculate the unit costs using activity rates. Round your answers to the nearest cent.
Unit costBasic$ per unitAdvanced$ per unit
Calculate the overhead cost per unit. Round your answers to the nearest cent.
Overhead CostBasic$ per unitAdvanced$ per unit
3. What if consumption ratios instead of activity rates were used to assigned costs? Show the cost assignment for the inspection activity.
Cost assignmentBasic$ Advanced$
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