Question
Hipster Home Appliances Inc. is estimating the activity cost associated with producing ovens and refrigerators. The indirect labor can be traced into four separate activity
Hipster Home Appliances Inc. is estimating the activity cost associated with producing ovens and refrigerators. The indirect labor can be traced into four separate activity pools, based on time records provided by the employees. The budgeted activity cost and activity-base information are provided as follows: 1 Activity Activity Pool Cost Activity Base 2 Procurement $61,020.00 Number of purchase orders 3 Scheduling 4,266.00 Number of production orders 4 Materials handling 10,738.00 Number of moves 5 Product development 7,636.00 Number of engineering changes 6 Total cost $83,660.00 The estimated activity-base usage and unit information for two product lines was determined from corporate records as follows: Number of Purchase Orders Production Orders Moves Engineering Changes Units Ovens 322 155 243 54 858 Refrigerators 243 82 170 38 660 Totals 565 237 413 92 1,518 Required: Complete the Activity Tables for ovens and refrigerators. A. Determine the activity rate for each activity cost pool. Enter these rates in the Activity Rate columns. B. Use the activity rates in (A) to determine the activity-based cost per unit of each product. Round the per-unit rates to the nearest cent.
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