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Pure Cane Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) in a continuous production process. Senior management has asked the controller
Pure Cane Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) 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 Activity Costs Production $247,500 Setup 48,000 Inspection 12,500 Shipping 69,300 Customer service 27,600 Total $404,900 The activity bases identified for each activity are as follows: Activity Activity Base Production Machine hours Setup Number of setups Inspection Number of inspections Shipping Number of customer orders Customer service Number of customer service requests The activity-base usage quantities and units produced for the three products were determined from corporate records as follows: Number of Number of Customer Service Requests Machine Hours Number of Setups Number of Inspections Customer Orders Units White sugar 2,000 50 100 410 25 8,000 Brown sugar 1,250 70 160 1,100 200 5,000 Powdered sugar 1,250 80 240 800 120 5,000 1 Total 4,500 200 500 2,310 345 18,000 Each product requires 0.25 machine hour per unit. Required: 1. Determine the activity rate for each activity. Activity Rate Production /mh Setup / setup Inspection /insp. Shipping A /cust. ord. Customer Service /req. 2. Determine the total and per-unit activity costs for all three products. Round "Activity cost per unit" answers to two decimal places. White Brown Powdered Sugar Sugar Sugar Total activity cost $ $ $ Activity cost per unit 3. Why aren't the activity unit costs equal across all three products since they require the same machine time per unit
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