Question
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
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 | $20 | per machine hour |
| Assembly | $14 | per direct labor hour |
| Setup | $57 | per setup |
| Inspecting | $23 | per inspection |
| Production scheduling | $15 | per production order |
| Purchasing | $12 | per purchase order |
The activity-base usage quantities and units produced for each product were as follows:
| Activity Base | Elliptical Machines | Treadmill | ||
| Machine hours | 2,011 | 1,186 | ||
| Direct labor hours | 382 | 149 | ||
| Setups | 50 | 16 | ||
| Inspections | 661 | 397 | ||
| Production orders | 63 | 13 | ||
| Purchase orders | 181 | 110 | ||
| Units produced | 301 | 202 | ||
Use the activity rate and usage information to determine the total activity cost and activity cost per unit for each product. If required, round the per unit answers to the nearest cent.
| Total Activity Cost | Activity Cost Per Unit | |
| Elliptical Machines | ||
| Treadmill |
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