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 Fabrication Assembly Setup Inspecting Production scheduling Purchasing Activity Rate $22 per machine hour $15 per direct labor hour $51 per setup $21 per inspection $16 per production order $13 per purchase order The activity-base usage quantities and units produced for each product were as follows: Activity Base Elliptical Machines Treadmill D Machine hours 1,700 1,003 Direct labor hours 495 193 Setups 53 16 Inspections 612 367 Production orders 75 15 Purchase orders 214 131 Units produced 266 178