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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 analysts of the overhead revealed the following estimated activity costs and activity bases for these Bumbes Activity Production setup Procurement Quality control Materials management Activity Cost Activity Base $87,000 Number of setups 131,250 Number of purchase orders (PC) 212.500 Number of inspectio 1/6,000 Number of components $600.750 The activity-hase usage quantities for each product are as follows: Setups Purchase Orders Inspections Components Unit Volume Custom 450 900 1,800 450 1,000 Standard 150 350 700 350 1,000 Total 600 1.250 2.500 600 2,000 a. Determine an activity rate for each activity. Activity Rates Activity cost + Activity Activity rate Production Setup /setup Procurement Quality Control /PO Materials Management Inspection S /component b. Assign activity custs to each product and determine the unit activity cost, using the activity rates from part (a). Round unit costs to the nearest cent. Custom Standard Setups Total Purchase Orders Total Inspections Total Components Total Total product cost Unt volume $ Unilust 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 per unit d. The custom product will consume materials management activities than will the standard product.
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