Activity Budgeted Activity Cost
Production $500,000
Setup $144,000
Inspection $44,...
Business, 30.03.2020 21:48 AnxiousKid
Activity Budgeted Activity Cost
Production $500,000
Setup $144,000
Inspection $44,000
Shipping $115,000
Customer service $84,000
Total $887,000
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 Units
Hours Setups Inspections Customer Service
Orders Requests
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:
1. Determine the activity rate for each activity.
2. Determine the total and per-unit activity cost for all three products.
Answers: 2
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