Solution-Determine the activity rate for each activity

Determine the activity rate for each activity

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Reference no: EM132690667

Problem - Activity rates and product costs using activity-based costing

Contemporary Lighting 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:

Activity	Budgeted Activity Cost	Activity Base
Casting	$106,400	Machine hours
Assembly	52,800	Direct labor hours
Inspecting	17,080	Number of inspections
Setup	33,600	Number of setups
Materials handling	35,700	Number of loads

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 are provided in the table below.

Activity Base	Entry	Dining	Total
Machine hours	2,600	1,200	3,800
Direct labor hours	1,000	2,300	3,300
Number of inspections	900	320	1,220
Number of setups	180	60	240
Number of loads	600	250	850
Units produced	7,500	3,000	10,500

Required -

a. Determine the activity rate for each activity.

b. Use the activity rates in (a) to determine the total and per-unit activity costs associated with each product.

Reference no: EM132690667

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Determine the activity rate for each activity

Reference no: EM132690667

Reference no: EM132690667

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