Question

Product Costs using Activity Rates Hercules Inc. manufactures elliptical exercise machines and treadmills. The products are produced in its Fabrication and Assembly production departments. In addition to production activities, several other activities are required to produce the two products. These activities and their associated activity rates are as follows: Activity Activity Rate Fabrication $21 per machine hour Assembly $15 per direct labor hour Setup Inspecting $45 per setup $21 per inspection $16 per production order Production scheduling Purchasing $13 per purchase order The activity-base usage quantities and units produced for each product were as follows: Activity Base Treadmill Machine hours Elliptical Machines 1,797 433 1,060 Direct labor hours 169 Setups 57 18 Inspections 379 Production orders 78 16 188 115 Purchase orders Units produced 268 180 Use the activity rate and usage information to determine the total activity cost and activity cost per unit for each product. If required, round the per unit answers to the nearest cent. Total Activity Cost Activity Cost Per Unit Elliptical Machines A Treadmill U

Answer 1

Calculate activity cost

	Elliptical Machines	Treadmill
Fabrication	37737	22260
Assembly	6495	2535
Setup	2565	810
Inspections	13251	7959
Production scheduling	1248	256
Purchasing	2444	1495
Total activity cost	63740	35315
Unit	268	180
Activity cost per unit	237.84	196.19