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	$251,598.00
3	Setup	92,035.00
4	Material handling	10,736.00
5	Inspection	49,833.00
6	Product engineering	136,230.00
7	Total	$540,432.00

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	970	63	84	489	123	1,354
Beta	802	123	138	272	170	1,044
Omega	435	209	266	256	185	452
Total	2,207	395	488	1,017	478	2,850

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 arent 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.

Activity Table - Alpha

Shaded cells have feedback.

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.

	Alpha
Activity	Activity-
	Base		Activity		Activity
	Usage	X	Rate	=	Cost
Production
Setup
Material handling
Inspection
Product Engineering
Total activity cost
Number of units
Activity cost per unit

Points:

0 / 28

Feedback

Check My Work

Calculate for each activity:

Total Activity Cost Total Activity-Base Usage = Activity Rate

Calculate for each product:

Activity-Base Usage x Activity Rate from Req. (1) = Activity Cost; Sum all activity costs per product to determine a total and divide the total overhead by budgeted units to derive the activity costs per unit for each product.

Activity Table - Beta

Shaded cells have feedback.

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.

	Beta
Activity	Activity-
	Base		Activity		Activity
	Usage	X	Rate	=	Cost
Production
Setup
Material handling
Inspection
Product Engineering
Total activity cost
Number of units
Activity cost per unit

Points:

0 / 28

Feedback

Check My Work

Calculate for each activity:

Total Activity Cost Total Activity-Base Usage = Activity Rate

Calculate for each product:

Activity-Base Usage x Activity Rate from Req. (1) = Activity Cost; Sum all activity costs per product to determine a total and divide the total overhead by budgeted units to derive the activity costs per unit for each product.

Activity Table - Omega

Shaded cells have feedback.

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.

	Omega
Activity	Activity-
	Base		Activity		Activity
	Usage	X	Rate	=	Cost
Production
Setup
Material handling
Inspection
Product Engineering
Total activity cost
Number of units
Activity cost per unit