Activity rates and product costs using activity-based cost
Idris 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:
Activity Budgeted
Activity Cost
Activity Base Casting $270,270 Machine hours Assembly 171,150 Direct labor hours Inspecting 28,320 Number of inspections Setup 52,060 Number of setups Materials handling 42,140 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 5,310 4,700 10,010 Direct labor hours 4,560 6,850 11,410 Number of inspections 1,790 570 2,360 Number of setups 310 70 380 Number of loads 770 210 980 Units produced 10,600 5,300 15,900
a. Determine the activity rate for each activity. If required, round the rate to the nearest dollar.
Activity Activity Rate Casting $fill in the blank 1 per machine hour Assembly $fill in the blank 2 per direct labor hour Inspecting $fill in the blank 3 per inspection Setup $fill in the blank 4 per setup Materials handling $fill in the blank 5 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 $fill in the blank 6 $fill in the blank 7 Dining Room Lighting Fixtures $fill in the blank 8 $fill in the blank 9