A producer of two different weed eaters: basic and advanced has four activities: machining, engineering,...
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Accounting
A producer of two different weed eaters: basic and advanced has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below.
Basic
Advanced
Total
Units produced
100,000
300,000
Prime costs
$7,600,000
$32,400,000
$40,000,000
Machine hours
100,000
500,000
600,000
Engineering hours
400
3,600
4,000
Receiving orders
500
1,500
2,000
Inspection hours
800
1,600
2,400
Overhead costs:
Machining
$9,000,000
Engineering
1,600,000
Receiving
640,000
Inspecting products
480,000
Required:
1. Calculate the four activity rates.
Machining rate
Engineering rate
Receiving rate
Inspecting rate
2. Calculate the unit costs using activity rates. Round your answers to the nearest cent.
Unit cost
Basic
Advanced
Calculate the overhead cost per unit. Round your answers to the nearest cent.
Overhead Cost
Basic
Advanced
3. If consumption ratios instead of activity rates were used to assign costs instead of activity rates, show the cost assignment for the inspection activity.
Cost assignment
Basic
Advanced
Answer & Explanation
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