PR 18-4A Activity-Based Product Costing Obj. 4 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: Activity Production Setup Materials handling Inspection Product engineering Total Activity Cost Pool $259,200 55,000 9,750 60,000 123,200 $507,150 The activity bases identified for each activity are as follows: Activity Activity Base Machine hours Production Setup Materials handling Inspection Product engineering Number of setups Number of parts Number of inspection hours 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: Number of Number of + Machine Hours Number of Number of Inspection Engineering Setups Parts Hours Hours Units Alpha Beta 1,440 75 65 400 125 1,800 1,080 165 80 300 175 1,350 Omega 720 310 180 500 140 900 Total 3,240 550 325 1,200 440 4,050 Each product requires 40 minutes per unit of machine time. Instructions 1. Determine the activity rate for each activity. 2. Determine the total and per-unit activity cost for all three products. Round to nearest cent. Answer Check Figure: Alpha total activity cost, $179,650 3. Why aren't the activity unit costs equal across all three products since they require the same machine time per unit?