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 Fabrication $26 per machine hour Assembly $40 per direct labor hour Setup $92 per setup Inspecting $25 per inspection Production scheduling $24 per production order Purchasing $15 per purchase order The activity-base usage quantities and units produced for each product were as follows: Activity Base Elliptical Machines Treadmill Machine hours 650 500 Direct labor hours 197 237 Setups 38 38 Inspections 17 27 Production orders 50 40 Purchase orders 315 74 Units produced 490 330