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Zeus Industries manufactures two types of electrical power units, custom and standard, which involve four factory overhead activitiesproduction setup, procurement, quality control, and materials management.

Zeus Industries manufactures two types of electrical power units, custom and standard, which involve four factory overhead activitiesproduction 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 Activity Cost Activity Base
Production setup $ 78,000 Number of setups
Procurement 110,000 Number of purchase orders (PO)
Quality control 176,000 Number of inspections
Materials management 140,000 Number of components
Total $504,000

The activity-base usage quantities for each product are as follows:

Setups Purchase Orders Inspections Components Unit Volume
Custom 350 900 1,800 400 1,000
Standard 250 200 400 300 1,000
Total 600 1,100 2,200 700 2,000

a. Determine an activity rate for each activity.

Activity Rates Production Setup Procurement Quality Control Materials Management
Activity cost $fill in the blank 1 $fill in the blank 2 $fill in the blank 3 $fill in the blank 4
Activity base fill in the blank 5 fill in the blank 6 fill in the blank 7 fill in the blank 8
Activity rate $fill in the blank 9 /setup $fill in the blank 10 /PO $fill in the blank 11 /inspection $fill in the blank 12 /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 Standard
Setups Total $fill in the blank 13 $fill in the blank 14
Purchase Orders Total fill in the blank 15 fill in the blank 16
Inspections Total fill in the blank 17 fill in the blank 18
Components Total fill in the blank 19 fill in the blank 20
Total product cost $fill in the blank 21 $fill in the blank 22
Unit volume fill in the blank 23 fill in the blank 24
Unit cost $fill in the blank 25 $fill in the blank 26

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. $fill in the blank 27per unit

d. The custom product will consume materials management activities than will the standard product.

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