Question

Create Activity Tables for Ovens and Refrigerators.

Hipster Home Appliances Inc. is estimating the activity cost associated with producing ovens and refrigerators. The indirect labor can be traced into four separate activity pools, based on time records provided by the employees. The budgeted activity cost and activity-base information are provided as follows: Activity Activity Pool Cost Activity Base Procurement 66,000.00 Number of purchase orders 12000 Number of production orders 3,28000 Number of moves 3 Scheduling Materials handling Product development Total cost 10000 Number of engineering changes 91,500.00 The estimated activity-base usage and unit information for two product lines was determined from corporate records as follows

Answer 1

Answer A) Calculation of Activity Rate :

Activity	Activity Pool cost	Activity Base	Activity Cost
Procurement	$66000	660 purchase Order	$100 per order
Scheduling	$4120	206 Production order	$20 per order
Materials Handling	$13280	415 Moves	$32 per Moves
Product development	$8100	108 engineering changes	$75 per changes
	$91500

Answet 2) Calculation Of Activity Cost per unit:

Activity	Rate per Activity	Product A	Prpduct B
Procurement	$100	$40000 (100*400	$26000 (100*260)
Scheduling	$20	$2720 (20*136)	$1400 (20*70)
Material Handling	$32	$7680 (32*240)	$5600 (32*175)
Product Deelopment	$75	$5100 (75*68)	$3000 (75*40)
Total cost (A)		$55500	$36000
Total Units (B)		740	600
Cost per Unit (A/B)		$75	$60