Product costs using activity rates Hercules Inc. manufactures elliptical exercise machines and treadmills. The products are produced in its Fabrication and Assembly production departments. In addition to production activities, several other activities are required to produce the two products. These activities and their associated activity rates are as follows: Activity Activity Rate $25 per machine hour Fabrication Assembly $30 per direct labor hour Setup Inspecting Production scheduling Purchasing $92 per setup $18 per inspection $17 per production order $8 per purchase order The activity base usage quantities and units produced for each product were as follows: Activity Base Elliptical Machines Treadmill Machine hours 800 650 Direct labor hours 228 278 Setups 32 32 Inspections 30 401 Production orders: 30 25 Purchase orders 389 143 Units produced 540 440