Product Costs using Activity Rates Hercules 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: Activity Activity Rate Fabrication $28 per machine hour Assembly $11 per direct labor hou Setup $48 per setup Inspecting $27 per inspection Production scheduling $12 per production order Purchasing $9 per purchase order The activity-base usage quantities and units produced for each product were as follows: Activity Base Elliptical Machines Treadmill Machine hours 1,949 1,150
Product Costs using Activity Rates Hercules 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: Activity Activity Rate Fabrication $28 per machine hour Assembly $11 per direct labor hou Setup $48 per setup Inspecting $27 per inspection Production scheduling $12 per production order Purchasing $9 per purchase order The activity-base usage quantities and units produced for each product were as follows: Activity Base Elliptical Machines Treadmill Machine hours 1,949 1,150
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Product Costs using Activity Rates
Hercules 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:
Activity
Activity Rate
Fabrication
$28 per machine hour
Assembly
$11 per direct labor hour
Setup
$48 per setup
Inspecting
$27 per inspection
Production scheduling
$12 per production order
Purchasing
$9 per purchase order
The activity-base usage quantities and units produced for each product were as follows:
Activity Base
Elliptical Machines
Treadmill
Machine hours
1,949
1,150
Direct labor hours
411
160
Setups
45
14
Inspections
622
373
Production orders
67
13
Purchase orders
184
112
Units produced
243
163
Use the activity rate and usage information to determine the total activity cost and activity cost per unit for each product. If required, round the per unit answers to the nearest cent.
Total Activity Cost
Activity Cost Per Unit
Elliptical Machines
$4
80,507
2$
45,867 X
Treadmill
33.10 | Х
$
281.40 X
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