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. Basic Advanced Total Units produced 80,000 240,000 ------ Prime costs $6,720,000 $27,360,000 $34,080,000 Machine hours 80,000 400,000 480,000 Engineering hours 500 4,500 5,000 Receiving orders 200 600 800 Inspection hours 800 1,600 2,400 Overhead costs: Machining $7,200,000 Engineering 2,250,000 Receiving 192,000 Inspecting products 336,000 Required: 1. Calculate the four activity rates. Machining rate $ per machine hour Engineering rate $ per hour Receiving rate $ per order Inspecting rate $ per hour 2. Calculate the unit costs using activity rates. Round your answers to the nearest cent. Unit cost Basic $ per unit Advanced $ per unit Calculate the overhead cost per unit. Round your answers to the nearest cent. Overhead Cost Basic $ per unit Advanced $ 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 assignment Basic $ Advanced $
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