Product Costs using Activity Rates
Hercules Inc. manufactures elliptical exercise machines andtreadmills. The products are produced in its Fabrication andAssembly production departments. In addition to productionactivities, several other activities are required to produce thetwo products. These activities and their associated activity ratesare as follows:
| Activity | Activity Rate |
| Fabrication | $27 | per machine hour |
| Assembly | $9 | per direct labor hour |
| Setup | $58 | per setup |
| Inspecting | $20 | per inspection |
| Production scheduling | $10 | per production order |
| Purchasing | $7 | per purchase order |
The activity-base usage quantities and units produced for eachproduct were as follows:
| Activity Base | Elliptical Machines | Treadmill |
| Machine hours | 1,680 | | 991 | |
| Direct labor hours | 494 | | 193 | |
| Setups | 61 | | 19 | |
| Inspections | 654 | | 392 | |
| Production orders | 78 | | 16 | |
| Purchase orders | 173 | | 106 | |
| Units produced | 288 | | 193 | |
Use the activity rate and usage information to determine thetotal activity cost and activity cost per unit for each product.If required, round the per unit answers to the nearestcent.
| Total Activity Cost | Activity Cost Per Unit |
| Elliptical Machines | $ | $ |
| Treadmill | $ | $ |
