Activity-Based Costing Cardio Care Inc. manufactures stationary bicycles and tre

Question

Activity-Based Costing Cardio Care Inc. manufactures stationary bicycles and treadmills. The products are produced in the 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 Fabrication Assembly Setup Inspecting Production scheduling Purchasing The activity-base usage quantities and units produced for each product were as follows: Activity Rate $25 per machine hour (mh) $15 per direct labor hour (dlh) $40 per setup $23 per inspection $18 per production order $6 per purchase order Stationary Bicycle Machine hours Direct labor hours Setups Inspections Production orders Purchase orders Units produced Use the activity rate and usage information to compute the total activity costs and the activity costs per unit for each product. If required, round your answers to two decimal places. Activity 2,010 390 60 690 50 120 1,000 Treadmill 820 160 20 340 40 110 1,000 Stationary Bicycle Activity Cost Treadmill Activity Cost Fabrication Assembly Setup Inspecting Production scheduling Purchasing Total Number of units Activity cost per unit

Explanation / Answer

Activity             Stationery Bicyle Treadmil rate driver Activity rate driver Activity cost cost Fabrication 25 2010 50250 25 820 20500 Assembly 15 390 5850 15 160 2400 Setup 40 60 2400 40 20 800 Inspecting 23 690 15870 23 340 7820 production Scheduling 18 50 900 18 40 720 purchasing 6 120 720 6 110 660 total 75990 32900 number of units 1,000 1,000 Activity cost per unit 75.99 32.9

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