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 Budgeted Activity Cost

Production $500,000

Setup 144,000

Inspection 44,000

Shipping 115,000

Customer Service 84,000

Total $887,000

The activity bases identified for each activity are as follows:

Activity

Production

Setup

Inspection

Activity Base

Machine hours

Number of setups

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 and are as follows:

Machine Hours

White sugar 5,000

Brown sugar 2,500

Powder sugar 2,500

Total 10,000

Number of

Setups

85

170

195

Total 450

Number of

Inspections

220

330

550

Total 1,100

Number of Customer

Orders

1,150

2,600

2,000

Total 5,750

Customer Service

Requests

60

350

190

Total 600

Units

10,000

5,000

5,000

Total 20,000

Required:

If required, round all per unit amounts to the nearest cent.

1. Determine the activity rate for each activity.

Production

per machine hour

Setup

per setup

Inspection

per inspection hour

Shipping

per cust. ord.

Customer service

per customer service request

2. Determine the total and per-unit activity cost for all three products.

Total Activity Cost

Activity Cost Per Unit