a. Determine the activity rate for each activity. Activity Activity Rate Casting $fill in the blank 1 per machine hour Assembly $fill in the blank 2 per direct labor hour Inspecting $fill in the blank 3 per inspection Setup $fill in the blank 4 per setup Materials handling $fill in the blank 5 per load b. Use the activity rates in (a) to determine the total and per-unit activity costs associated with each product. Round the per unit amounts to the nearest cent. Product Total Activity Cost Activity Cost Per Unit Entry Lighting Fixtures $fill in the blank 6 $fill in the blank 7 Dining Room Lighting Fixtures $fill in the blank 8 $fill in the blank 9
a. Determine the activity rate for each activity. Activity Activity Rate Casting $fill in the blank 1 per machine hour Assembly $fill in the blank 2 per direct labor hour Inspecting $fill in the blank 3 per inspection Setup $fill in the blank 4 per setup Materials handling $fill in the blank 5 per load b. Use the activity rates in (a) to determine the total and per-unit activity costs associated with each product. Round the per unit amounts to the nearest cent. Product Total Activity Cost Activity Cost Per Unit Entry Lighting Fixtures $fill in the blank 6 $fill in the blank 7 Dining Room Lighting Fixtures $fill in the blank 8 $fill in the blank 9
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Activity rates and product costs using activity-based costing
Idris 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 | $640,000 | Machine hours |
| Assembly | 125,000 | Direct labor hours |
| Inspecting | 30,000 | Number of inspections |
| Setup | 28,000 | Number of setups |
| Materials handling | 20,000 | 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 follow:
| Activity Base | Entry | Dining | Total |
|---|---|---|---|
| Machine hours | 7,500 | 12,500 | 20,000 |
| Direct labor hours | 3,000 | 2,000 | 5,000 |
| Number of inspections | 200 | 400 | 600 |
| Number of setups | 150 | 200 | 350 |
| Number of loads | 400 | 600 | 1,000 |
| Units produced | 5,000 | 4,000 | 9,000 |
a. Determine the activity rate for each activity.
| Activity | Activity Rate |
|---|---|
| Casting | $fill in the blank 1 per machine hour |
| Assembly | $fill in the blank 2 per direct labor hour |
| Inspecting | $fill in the blank 3 per inspection |
| Setup | $fill in the blank 4 per setup |
| Materials handling | $fill in the blank 5 per load |
b. Use the activity rates in (a) to determine the total and per-unit activity costs associated with each product. Round the per unit amounts to the nearest cent.
| Product | Total Activity Cost | Activity Cost Per Unit |
|---|---|---|
| Entry Lighting Fixtures | $fill in the blank 6 | $fill in the blank 7 |
| Dining Room Lighting Fixtures | $fill in the blank 8 | $fill in the blank 9 |
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