Volt-Gear Industries manufactures two types of electrical power units, custom and standard, which involve four overhead activities'production setup, procurement, quality control, and materials management. An activity analysis of the overhead revealed the following estimated costs and activity bases for these activities:

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

a. Determine an activity rate for each activity.
b. Assign activity costs to each product, and determine the unit activity cost using the activity rates from part (a).
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.
d. Explain why the answers in parts (b) and (c) aredifferent.

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Activity Production setup Procurement Quality control Materials management Cost Activity Base 48,000 Number of setups 118,000 160,000 Number of purchase orders Number of inspections Number of components Total Purchase Orders Unit Volume Setups 375 125 500 Inspections Custom Standard Total 1,800 200 2,000 Components 300 200 500 3,000 3,000 6,000 900 100 1,000