Product Costs using Activity Rates Atlas Enterprises Inc. manufactures elliptica

Question

Product Costs using Activity Rates Atlas Enterprises Inc. manufactures elliptical exercise machines and treadmills. The products are produced in its Fabrication and Assembly production departments. In addition to production activities, several other activities are required to produce the two products. These activities and their associated activity rates are as follows: Activity Activity Rate Fabrication $30 per machine hour Assembly $17 per direct labor hour Setup $56 per setup Inspecting $30 per inspection Production scheduling $18 per production order Purchasing $15 per purchase order The activity-base usage quantities and units produced for each product were as follows: Activity Base Elliptical Machines Treadmill Machine hours 1,865 1,100 Direct labor hours 476 186 Setups 53 16 Inspections 674 404 Production orders 76 15 Purchase orders 211 129 Units produced 253 170 Use the activity rate and usage information to calculate the total activity cost and activity cost per unit for each product. If required, round the per unit answers to the nearest cent. Total Activity Cost Activity Cost Per Unit Elliptical Machines $ $ Treadmill $ $

Explanation / Answer

Calculation of activity cost Elliptical Machine Treadmill Fabrication 55950 33000 Assembly 8092 3162 Set up 2968 896 Inspections 20220 12120 Production orders 1368 270 Purchase orders 3165 1935 Total activity cost 91763 51383 Units Produced 253 170 Activity Cost Per Unit 362.70 302.25

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