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	$32	per machine hour
Assembly	$30	per direct labor hour
Setup	$95	per setup
Inspecting	$16	per inspection
Production scheduling	$15	per production order
Purchasing	$6	per purchase order

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

Activity Base	Elliptical Machines		Treadmill
Machine hours	650		400
Direct labor hours	212		273
Setups	43		43
Inspections	13		21
Production orders	30		25
Purchase orders	317		75
Units produced	490		390

This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the question below.

Open spreadsheet

Use the activity rate and usage information to calculate 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	$	$ 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: DATA Activity Fabrication Assembly Setup Inspecting Production scheduling Purchasig Activity Rate 32 per machine hour 30 per direct labor hour hour 95 per setup 16 per inspection 15 per production order 6 per purchase order The activity-base usage quantities and units produced for each product were as follows: Treadmill Activity Base Machine hours Direct labor hours Setups Inspections Production orders Purchase orders Units produced DATA Elliptical Machines 650 212 43 13 30 317 490 400 273 43 21 25 75 390 Using formulas and cell references, perform the required analysis, and input your answers into Total Activity Cost and Activity Cost Per Unit columns. Transfer the numeric results for the green entry cells (C29:D30) into the appropriate fields in CNOW2 for grading. Total Activity Cost Activity Cost Per Unit Formulas Elliptical Machines Treadmill

Answer 1

		Elliptical Machine	Treadmill
	ABC rate(Common for both)	Activity Based usage	Activity Based usage*ABC rate	Activity Based usage	Activity Based usage*ABC rate
Fabrication	$                                       32	650	$                                       20,800	400	$                                   12,800
Assembly	$                                       30	212	$                                         6,360	273	$                                     8,190
Setup	$                                       95	43	$                                         4,085	43	$                                     4,085
Inspecting	$                                       16	13	$                                            208	21	$                                        336
Production Scheduling	$                                       15	30	$                                            450	25	$                                        375
Purchasing	$                                         6	317	$                                         1,902	75	$                                        450
Total Activity Cost			$                                       33,805		$                                   26,236
No. of units			490		390
Activity Cost per unit			$                                         68.99		$                                     67.27