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 $570,000 Machine hours Assembly 80,000 Direct labor hours Inspecting 42,000 Number of inspections Setup 38,000 Number of setups Materials handling 23,750 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 6,000 13,000 19,000 Direct labor hours 3,000 2,000 5,000 Number of inspections 600 400 1,000 Number of setups 300 200 500 Number of loads 450 500 950 Units produced 6,000 3,000 9,000 a. Determine the activity rate for each activity. Activity Activity Rate Casting per machine hour Assembly per direct labor hour Inspecting per inspection Setup per setup Materials handling 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. Total Activity Cost Product Activity Cost Per Unit Entry Lighting Fixtures Dining Room Lighting Fixtures

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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
$570,000
Machine hours
Assembly
80,000
Direct labor hours
Inspecting
42,000
Number of inspections
Setup
38,000
Number of setups
Materials handling
23,750
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
6,000
13,000
19,000
Direct labor hours
3,000
2,000
5,000
Number of inspections
600
400
1,000
Number of setups
300
200
500
Number of loads
450
500
950
Units produced
6,000
3,000
9,000
a. Determine the activity rate for each activity.
Activity
Activity Rate
Casting
per machine hour
Assembly
per direct labor hour
Inspecting
per inspection
Setup
per setup
Materials handling
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
$4
Feedback
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 $570,000 Machine hours Assembly 80,000 Direct labor hours Inspecting 42,000 Number of inspections Setup 38,000 Number of setups Materials handling 23,750 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 6,000 13,000 19,000 Direct labor hours 3,000 2,000 5,000 Number of inspections 600 400 1,000 Number of setups 300 200 500 Number of loads 450 500 950 Units produced 6,000 3,000 9,000 a. Determine the activity rate for each activity. Activity Activity Rate Casting per machine hour Assembly per direct labor hour Inspecting per inspection Setup per setup Materials handling 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 $4 Feedback
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