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
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 activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows:1 Activity Budgeted Activity Cost 2 Production $500,000.00 3 Setup 144,000.00 4 Inspection 44,000.00 5 Shipping 115,000.00 6 Customer service 84,000.00 7 Total $887,000.00 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 and are as follows: Machine Number of Number of Number of Customer Service Hours Setups Inspections Customer Orders Requests Units White sugar 5,000 85 220 1,150 60 10,000 Brown sugar 2,500 170 330 2,600 350 5,000 Powdered sugar 2,500 195 550 2,000 190 5,000 Total 10,000 450 1,100 5,750 600 20,000 Each product requires 0.5 machine hour per unit. Required: Complete the Activity Tables for White sugar, Brown sugar, and Powdered sugar. 1. Determine the activity rate for each activity.* 2. Use the activity rates in (1) to determine the total and per-unit activity costs associated with all three products.* 3.Why arent the activity unit costs equal across all three products since they require the same machine time per unit? * If required, round all per-unit amounts to the nearest cent.
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