Sweet Sugar Company manufactures three products ( white sugar, brown sugar, and powdered sugar ) in a
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Question:
Sweet 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 activitybased 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 $
Setup
Inspection
Shipping
Customer Service
Total $
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 activitybase usage quantities and units produced for the three products were determined from corporate records and are as follows:
Line Item Description Machine Hours Number of Setups Number of Inspections Number of Customer Orders Customer Service Requests Units
White sugar
Brown sugar
Powdered sugar
Total
Each product requires machine hour per unit.
Required:
If required, round all per unit amounts to the nearest cent.
Determine the activity rate for each activity.
Activity Amount
Production $fill in the blank
per machine hour
Setup $fill in the blank
per setup
Inspection $fill in the blank
per inspection hour
Shipping $fill in the blank
per cust. ord.
Customer service $fill in the blank
per customer service request
Determine the total and perunit activity cost for all three products.
Line Item Description Total Activity Cost Activity Cost Per Unit
White sugar $fill in the blank
$fill in the blank
Brown sugar fill in the blank
fill in the blank
Powdered sugar fill in the blank
fill in the blank
Why arent the activity unit costs equal across all three products since they require the same machine time per unit?
The unit costs are different because the products consume many activities in ratios different from the fill in the blank of
volume
Feedback Area
Feedback
Calculate Activity Rate for each activity:
Total Cost : Total ActivityBase Activity Rate
Calculate Activity Cost for each product:
ActivityBase Usage times Activity rate from Req. Activity cost; Sum all activity costs per product to determine a total and divide the total overhead by budgeted units to derive the activity costs per unit for each product.
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