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Zeus Industries manufactures two types of electrical power units, custom and standard, which involve four factory overhead activities-production setup, procurement, quality control, and materials
Zeus Industries manufactures two types of electrical power units, custom and standard, which involve four factory overhead activities-production setup, procurement, quality control, and materials management. An activity analysis of the overhead revealed the following estimated activity costs and activity bases for these activities: Activity Production setup Procurement Quality control Materials management Total Activity Cost Activity Base $ 62,500 Number of setups 109,250 Number of purchase orders (PO) 184,000 Number of inspections 168,000 Number of components $523,750 The activity-base usage quantities for each product are as follows: Purchase Setups Inspections Components Unit Volume Orders Custom 400 750 1,500 450 1,000 Standard 100 400 800 350 1,000 Total 500 1,150 2,300 800 2,000 a. Determine an activity rate for each activit Activity Rates Activity cost + Activity base $ Production Setup Procurement Quality Control Materials Management $ Activity rate /setup /PO $ /inspection /component b. Assign activity costs to each product and determine the unit activity cost, using the activity rates from part (a). Round unit costs to the nearest cent. Custom Setups Total Purchase Orders Total Inspections Total Components Total Total product cost Unit volume Unit cost $ $ Standard c. Assume that each product required one direct labor hour per unit. Determine the per-unit cost if factory overhead is allocated on the basis of direct labor hours. Round your answer to the nearest cent. S per unit d. The custom product will consume materials management activities than will the standard product.
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