Zeus Industries manufactures two types of electrical power units, custom and standard, which involve four factory overhead activities—production setup, procurement, quality control, and materials management. An activity analysis of the overhead revealed the following estimated activity costs and activity bases for these activities: Activity Activity Cost Activity Base Production setup $ 44,000 Number of setups Procurement 13,500 Number of purchase orders (PO) Quality control 97,500 Number of inspections Materials management 84,000 Number of components Total $239,000 The activity-base usage quantities for each product are as follows: Setups Purchase Orders Inspections Components Unit Volume Custom 290 760 1,200 500 2,000 Standard 110 140 300 200 2,000 Total 400 900 1,500 700 4,000 a. Determine an activity rate for each activity. b. Assign activity costs to each product and determine the unit activity cost, c. Assume that each product required one direct labor hour per unit. Determine the per-unit cost if factory overhead is allocated on the basis of direct labor hours.
Zeus Industries manufactures two types of electrical power units, custom and standard, which involve four factory
Activity
Activity Cost
Activity Base
Production setup
$ 44,000
Number of setups
Procurement
13,500
Number of purchase orders (PO)
Quality control
97,500
Number of inspections
Materials management
84,000
Number of components
Total
$239,000
The activity-base usage quantities for each product are as follows:
Setups
Purchase
Orders
Inspections
Components
Unit Volume
Custom
290
760
1,200
500
2,000
Standard
110
140
300
200
2,000
Total
400
900
1,500
700
4,000
a. Determine an activity rate for each activity.
b. Assign activity costs to each product and determine the unit activity cost, c. Assume that each product required one direct labor hour per unit. Determine the per-unit cost if factory overhead is allocated on the basis of direct labor hours. Round your answer to two decimal places.using the activity rates from part (a). Round unit cost to two decimal places.
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