Activity Rates and Product Costs using Activity-Based Costing Lonsdale 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: Budgeted Activity Activity Cost Activity Base Casting $248,160 Machine hours Assembly 176,850 Direct labor hours Inspecting 28,800 Number of inspections Setup 36,960 Number of setups Materials handling 38,130 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 5,480 4,860 10,340 Direct labor hours 4,720 7,070 11,790 Number of inspections 1,820 580 2,400 Number of setups 190 50 240 Number of loads 730 200 930 Units produced 10,800 5,400 16,200 a. Determine the activity rate for each activity. If required, round the rate to the nearest dollar. Activity Activity Rate Casting %24 per machine hour Assembly %24 per direct labor hour Inspecting 24 per inspection Setup %24 per setup Materials handling %24 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 Dining Room Lighting Fixtures
Activity Rates and Product Costs using Activity-Based Costing Lonsdale 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: Budgeted Activity Activity Cost Activity Base Casting $248,160 Machine hours Assembly 176,850 Direct labor hours Inspecting 28,800 Number of inspections Setup 36,960 Number of setups Materials handling 38,130 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 5,480 4,860 10,340 Direct labor hours 4,720 7,070 11,790 Number of inspections 1,820 580 2,400 Number of setups 190 50 240 Number of loads 730 200 930 Units produced 10,800 5,400 16,200 a. Determine the activity rate for each activity. If required, round the rate to the nearest dollar. Activity Activity Rate Casting %24 per machine hour Assembly %24 per direct labor hour Inspecting 24 per inspection Setup %24 per setup Materials handling %24 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 Dining Room Lighting Fixtures
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Activity Rates and Product Costs using Activity-Based
Costing
Lonsdale 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:
Budgeted
Activity
Activity Cost Activity Base
Casting
$248,160 Machine hours
Assembly
176,850 Direct labor hours
Inspecting
28,800 Number of inspections
Setup
36,960 Number of setups
Materials handling
38,130 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
5,480 4,860 10,340
Direct labor hours
4,720 7,070 11,790
Number of inspections
1,820
580
2,400
Number of setups
190
50
240
Number of loads
730
200
930
Units produced
10,800 5,400 16,200
a. Determine the activity rate for each activity. If
required, round the rate to the nearest dollar.
Activity
Activity Rate
Casting
%24
per machine hour
Assembly
%24
per direct labor hour
Inspecting
24
per inspection
Setup
%24
per setup
Materials handling
%24
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
Dining Room Lighting Fixtures
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