eBook Calculator Print Item Product Costs using Activity Rates Atlas Enterprises
ID: 342098 • Letter: E
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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:
The activity-base usage quantities and units produced for each product were as follows:
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.
Activity Activity Rate Fabrication $30 per machine hour Assembly $12 per direct labor hour Setup $49 per setup Inspecting $27 per inspection Production scheduling $13 per production order Purchasing $10 per purchase orderExplanation / Answer
ANS:- Calculation of Total activity Cost and activity cost per unit In activity - base cosing system cost is calculated by deciding cost drivers and cost of each cost driver. For calulating cost No. of activity of cost driver is multiplied with cost each cost driver. Activity Activity Base Activity Rate $ Activity Base Usage Activity Base Cost = A. Usage x A. Rate Elliptical Machines Treadmill Elliptical Machines Treadmill Fabrication Machine Hours 30 1801 1063 54,030 31,890 Assembly Direct labour Hours 12 475 185 5,700 2,220 Setup Set Ups 49 50 16 2,450 784 Inspecting Inspections 27 688 413 18,576 11,151 Production scheduling Production orders 13 74 15 962 195 Purchasing Purchase orders 10 193 118 1,930 1,180 Total Activity Costs 83,648 47,420 Unit Produced 313 210 Activity Base Cost per Unit 267.25 225.81 Total Activity Costs Activity Base Cost per Unit Elliptical Machines 83,648.00 267.25 Treadmill 47,420.00 225.81
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