Activity-Based Product Costing Sweet Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows: Activity Budgeted Activity Cost Production $396,000 Setup 280,700 Inspection 88,800 Shipping 122,400 Customer service 58,500 Total $946,400 The activity bases identified for each activity are as follows: Activity Activity Base Production Machine hours Setup Number of setups Inspection Number of inspections Shipping Number of customer orders Customer service Number of customer service requests The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows: Customer Number of Number of Number of Service Setups Customer Orders Machine Hours Inspections Requests Units

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Activity-Based Product Costing
Sweet Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) in a continuous production process. Senior management has asked
the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as
follows:
Activity
Budgeted Activity Cost
Production
$396,000
Setup
280,700
Inspection
88,800
Shipping
122,400
Customer service
58,500
Total
$946,400
The activity bases identified for each activity are as follows:
Activity
Activity Base
Production
Machine hours
Setup
Number of setups
Inspection
Number of inspections
Shipping
Number of customer orders
Customer service
Number of customer service requests
The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows:
Customer
Number of
Number of
Number of
Service
Setups
Customer Orders
Machine Hours
Inspections
Requests Units
Transcribed Image Text:Activity-Based Product Costing Sweet Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows: Activity Budgeted Activity Cost Production $396,000 Setup 280,700 Inspection 88,800 Shipping 122,400 Customer service 58,500 Total $946,400 The activity bases identified for each activity are as follows: Activity Activity Base Production Machine hours Setup Number of setups Inspection Number of inspections Shipping Number of customer orders Customer service Number of customer service requests The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows: Customer Number of Number of Number of Service Setups Customer Orders Machine Hours Inspections Requests Units
Customer
Number of
Number of
Number of
Service
Setups
Customer Orders
Machine Hours
Inspections
Requests Units
White sugar
3,170
180
240
720
50 7,925
Brown sugar
2,020
270
360
1,980
320 5,050
Powdered sugar
2,010
250
600
900
130 5,025
Total
7,200
700
1,200
3,600
500 18,000
Each product requires 0.9 machine hour per unit.
Required:
If required, round all per unit amounts to the nearest cent.
1. Determine the activity rate for each activity.
Production
2$
per machine hour
Setup
$
per setup
Inspection
per move
Shipping
per cust. ord.
Customer service
per customer service request
2. Determine the total and per-unit activity cost for all three products.
Total Activity Cost
Activity Cost Per Unit
White sugar
$
Brown sugar
Powdered sugar
Transcribed Image Text:Customer Number of Number of Number of Service Setups Customer Orders Machine Hours Inspections Requests Units White sugar 3,170 180 240 720 50 7,925 Brown sugar 2,020 270 360 1,980 320 5,050 Powdered sugar 2,010 250 600 900 130 5,025 Total 7,200 700 1,200 3,600 500 18,000 Each product requires 0.9 machine hour per unit. Required: If required, round all per unit amounts to the nearest cent. 1. Determine the activity rate for each activity. Production 2$ per machine hour Setup $ per setup Inspection per move Shipping per cust. ord. Customer service per customer service request 2. Determine the total and per-unit activity cost for all three products. Total Activity Cost Activity Cost Per Unit White sugar $ Brown sugar Powdered sugar
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