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	Activity Rate
Fabrication	$31	per machine hour
Assembly	$15	per direct labor hour
Setup	$50	per setup
Inspecting	$29	per inspection
Production scheduling	$16	per production order
Purchasing	$13	per purchase order

The activity-base usage quantities and units produced for each product were as follows:

Activity Base	Elliptical Machines		Treadmill
Machine hours	1,712		1,010
Direct labor hours	407		159
Setups	61		19
Inspections	699		419
Production orders	66		13
Purchase orders	170		104
Units produced	310		208

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	$	$
Treadmill	$	$

Answer 1

Total Activity Cost Activity cost per unit 85,764 $ 276.66 48,356 $ 232.48 Elliptical Machines Treademill 5 Working Notes: Activity Activity rate [A] [B] $ Elliptical Machines [ AB] Activity Base Activity Cost 1,712 $ 53,072 407 6,105 61 3,050 20,271 66 1,056 170 2,210 $ 85,764 Fabrication Assembly Setup Inspecting Production scheduling Purchasing $ Treademill [C] [ AC] Activity Base Activity Cost 1,010 $ 31,310 159 2,385 950 419 12,151 13 208 1,352 $ 48,356 31 per machine hour 15 per direct labor hour 50 per setup 29 per inspection 16 per production order 13 per purchase order Total Activity Cost 19 699 104 Activity cost (a) Units produced (b) Activity cost per unit (a/b) Elliptical Machines 85,764 $ 310 $ 276.66 $ Treademill 48,356 208 232.48