Determine the activity rate for each activity

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Reference no: EM131594836

Activity-Based Costing -

Pure Cane Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) In a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows:

Activity

Activity Costs

Production

$247,500

Setup

48,000

Inspection

12,500

Shipping

69,300

Customer service

27,600

Total

$404,900

The activity bases Identified for each activity are as follows:

Activity

Activity Base

Production

Machine hours

Setup

Number of setups

Inspection

Number of inspections

Shipping

Number of customer orders

Customer service

Number of customer service requests

The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows:

 

Machine Hours

Number of Setups

Number of Inspections

Number of Customer Orders

Number of Customer Service Requests

Units

White sugar

2,000

50

100

410

25

8,000

Brown sugar

1,250

70

160

1,100

200

5,000

Powdered sugar

1,250

80

240

800

120

5,000

Total

4,500

200

500

2,310

345

18,000

Each product requires 0.25 machine hour per unit.

Required:

1. Determine the activity rate for each activity.

2. Determine the total and per-unit activity costs for all three products. Round "Activity cost per unit" answers to two decimal places.

Reference no: EM131594836

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