Question

Activity Rates and Product Costs using Activity-Based Costing Garfield Inc. manufactures entry and dining room lighting fixtures. Five activities are used in manufacturing the fixtures. These activities and their associated budgeted activity costs and activity bases are as follows: Budgeted Activity Casting Assemblyy Inspecting Setup Materials handling Corporate records were obtained to estimate the amount of activity to be used by the two products. The estimated activity-base usage quantities and units produced follow Activity Base Machine hours Direct labor hours Number of inspections 1,360 430 1,790 Number of setups Number of loads Units produced a, Determine the activity rate for each activity. If required, round the rate to the nearest dollar Activity Cost Activity Base $234,830 Machine hours 162,960 19,690 58,520 39,950 Direct labor hours Number of inspections Number of setups Number of loads Entry Dining Total 5,410 4,800 10,210 4,660 6,980 11,640 70 180 10,8005,400 16,200 310 380 670 850

Answer 1

Solution with working

Calculation of Activity rates
Activity Cost Pool	Activity driver	Overhead Cost	Expected Activity (B)	Activity rate (A/B)
Casting	Number of Machine hours	$      2,34,830.00	10,210	$          23.00	Per Machine hours
Assembly	Number of Direct labor hours	$      1,62,960.00	11640	$          14.00	Per Direct labor hours
Inspection	Number of Inspections	$         19,690.00	1790	$          11.00	Per Inspections
Setup	Number of Setups	$         58,520.00	380	$       154.00	Per Setups
Material handling	Number of Loads	$         39,950.00	850	$          47.00	Per Loads