Question

CH18 #10

Please help with this asap. Thanks alot

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 $28 per machine hour $12 per direct labor hour $54 per setup Fabrication Assembly Setup Inspecting Production scheduling Purchasing $27 per inspection $13 per production order $10 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 1,822 493 48 600 1,075 192 15 360 Setups Inspections Production orders 25 Purchase orders 197 120 Units produced 285 191 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

Solution

	Total Activity cost	Activity Cost per unit
Elliptical Machines	$ 78,695.00	$ 276.12
Treadmill	$ 44,329.00	$ 232.09

Working

Cost assigned to Elliptical Machines
Activity name	Activity Rates	Activity	ABC Cost
	(A)	(B)	(A x B)
Fabrication	$           28.00	1,822.00	$ 51,016
Assembly	$           12.00	493.00	$ 5,916
Setup	$           54.00	48.00	$ 2,592
Inspection	$           27.00	600.00	$ 16,200
Production scheduling	$           13.00	77.00	$ 1,001.00
Purchasing	$           10.00	197.00	$ 1,970.00
Total Overheads assigned			$ 78,695
Production			285.00
Overhead cost per unit			$ 276.12

Cost assigned to Treadmill
Activity name	Activity Rates	Activity	ABC Cost
	(A)	(B)	(A x B)
Fabrication	$           28.00	1075	$ 30,100
Assembly	$           12.00	192	$ 2,304
Setup	$           54.00	15	$ 810
Inspection	$           27.00	360	$ 9,720
Production scheduling	$           13.00	15	$ 195
Purchasing	$           10.00	120	$ 1,200
Total Overheads assigned			$ 44,329
Production			191.00
Overhead cost per unit			$              232.09