Question

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 Rate Activity Fabrication Assembly Setup Inspecting Production scheduling Purchasing $26 per machine hour $36 per direct labor hour $87 per setup $20 per inspection $19 per production order $10 per purchase order The activity-base usage quantities and units produced for each product were as follows: Activity Base Machine hours Direct labor hours Elliptical Machines 600 Treadmill 400 Setups Inspections Production orders Purchase orders Units produced

Answer 1

Activity	Cost Driver	Elliptical Machines		Treadmills
Fabrication	Machine hours	26*600	15600	26*400	10400
Assembly	DLH	36*243	8748	36*269	9684
Set up	no o set ups	87*18	1566	87*18	1566
Inspecting	No of inspections	20*24	480	20*31	620
Product Scheduling	No of Production orders	19*30	570	19*20	380
Purchasing	No of Purchase orders	10*370	3700	10*146	1460
Total Activity Costs			30664		24110
Total Units Produced		Given	450	Given	330
Activity Cost per UnIt	Activity costs / Units produced		68.14		73.06

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