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 Rate Activity Fabrication $32 per machine hour per direct labor hour Assembly Setup Inspecting Production scheduling Purchasing $90 per setup per inspection per production order per purchase order The activity-base usage quantities and units produced for each product were as follows: Activity Base Elliptical Machines Treadmill Machine hours Direct labor hours Setups Inspections Production orders Purchase orders Units produced This information has been collected in the Microsoft Excel Online file Open the spreadsheet equired analysis, and input your answers in the question below.

Answer 1

Answer:-

	Elliptical machine	Treadmill
Fabrication cost @ $32 per MH	$           19,200	$            11,200
Assembly cost @ $31 per DLH	7,316	8,587
Setup cost @$90 per setup	2,430	2,430
Inspecting costs @ $15 per inspection	180	330
Production scheduling cost @ $14 per production order	420	280
Purchasing cost @ $5 per purchase order	1,665	465
Total activity costs	$           31,211	$            23,292
Units produced	470	360
Activity cost per unit	$             66.41	$              64.70