Activity-Based Product Costing Swect Sugar Company manufactures three products (

Question

Activity-Based Product Costing Swect Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) In a continuous production process. Se based costing study. The controller identified the amount of factory overhead required hy the critical activities of the organization as follows: Activity Production Setup Inspection Shipping Cuslomier service management has asked the controller to conduct an activity- Budgeted Activity Cost $486,400 210,500 83,000 172,200 46,000 $998,100 Total The activity bases identified for each activity are as follows: Activity Production Setup Inspection Shipping Customer service Number of customer service requests The activity-base usage quantitles and units produced for the three products were determined from corporate records and are as follows: Activity Base Machine hours Number of setups Number ot inspections Nurnber of customer orders

Explanation / Answer

1) Determine activity rate :

Calculate activity cost and activity cost per unit :

3) THe unit cost are different because the products consume many activities in ratio different from the volume.

Production 64 per machine hour Setup 421 per setups Inspection 83 per inspection Shipping 41 per order Customer service 115 per test run

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