EX 18-11 Activity Rates and Product Costs Using Activity-Based Costing Obj. 4 Lonsdale Inc. manufactures entry and dining room lighting fixtures. Five activities are used in manufacturing the fixtures. These activities and their associated budgeted activity costs and activity bases are as follows: Activity Base Activity Casting Assembly Inspecting Setup Materials handling Budgeted Activity Cost $570,000 80,000 42,000 38,000 23,750 Machine hours Direct labor hours Number of inspections Number of setups Number of loads Corporate records were obtained to estimate the amount of activity to be used by the two products. The estimated activity-base usage quantities and units produced follow: Dining Activity Base Machine hours Direct labor hours Number of inspections Number of setups Number of loads Units produced Entry 6,000 3,000 600 Total 19,000 5,000 1,000 500 950 9,000 13,000 2,000 400 200 500 3,000 300 450 6,000 a. Determine the activity rate for each activity. b. Use the activity rates in (a) to determine the total and per-unit activity costs associated with each product. Round to the nearest cent. Answer a. Budgeted Activity Cost Activity Casting Assembly Inspecting Setup Materials handling Total Activity Base mh dlh insp. setups loads Activity Rate /mh Idih /insp. /setup /load Activity Cost Activity Cost = Activity Casting Assembly Inspecting Setup Materials handling Total activity cost Number of units Activity cost per unit Entry Lighting Fixtures Activity Activity Base Usage X Rate mh dlh insp. setups loads Dining Room Lighting Fixtures Activity Activity Base Usage Rate mh dlh insp. setups loads