Activity-Based Product Costing
Roberts Company produces two weed eaters: basic and advanced.The company has four activities: machining, engineering, receiving,and inspection. Information on these activities and their driversis given below.
| | Basic | | Advanced | | Total |
| Units produced | | 130,000 | | 390,000 | | — |
| Prime costs | | $9,620,000 | | $41,340,000 | | $50,960,000 |
| Machine hours | | 130,000 | | 650,000 | | 780,000 |
| Engineering hours | | 300 | | 2,700 | | 3,000 |
| Receiving orders | | 200 | | 600 | | 800 |
| Inspection hours | | 1,000 | | 2,000 | | 3,000 |
| |
| Overhead costs: | |
| Machining | | $7,800,000 |
| Engineering | | 1,410,000 |
| Receiving | | 200,000 |
| Inspecting products | | 390,000 |
Required:
1. Calculate the four activity rates.
| Machining rate | $ per machine hour |
| Engineering rate | $ per hour |
| Receiving rate | $ per order |
| Inspecting rate | $ per hour |
2. Calculate the unit costs using activityrates. Round your answers to the nearest cent.
| Unit cost |
| Basic | $ per unit |
| Advanced | $ per unit |
Calculate the overhead cost per unit. Round your answers to thenearest cent.
| Overhead Cost |
| Basic | $ per unit |
| Advanced | $ per unit |
3. If consumption ratios instead of activityrates were used to assign costs instead of activity rates, show thecost assignment for the inspection activity.
| Cost assignment |
| Basic | $ |
| Advanced | $ |
