a. Determine the activity rate for each activity. b. Use the activity rates in (a) to determine the total and per-unit activity costs associated with each product. If required, round your answers to two decimal places. Activity Rates and Product Costs Using Activity-Based Costing Brite Lite Inc. manufactures entry and dining room lighting fixtures. Five activities are used in manufacturing the fixtures. These activities and their associated activity costs and activity bases are as follows: 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 for each product and in total are provided in the table below.
Solution
Activity Activity cost (A) Cost Driver Total cost Driver (B) Cost per unit of cost driver (A)/(B) =C Cost driver in Entry (D) Cost driver in Dining (E) Entry Cost C*(D) = F Dining Cost C*(E) = G Per unit cost in Dining =F/Number of units produced Per unit cost in Entry = G/Number of units produced Casting 42000 Machine hours 1400 30 800 600 24000 18000 20.00 36.00 Assembly 13500 Direct labour hours 900 15 500 400 7500 6000 6.25 12.00 Inspecting 5800 Number of inspections 290 20 140 150 2800 3000 2.33 6.00 Setup 16800 Number of setups 140 120 80 60 9600 7200 8.00 14.40 Materials Handling 3600 Number of loads 90 40 90 40 3600 1600 3.00 3.20
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a- Determine the activity rate for each activity- b- Use the activity.docx
1. a. Determine the activity rate for each activity. b. Use the activity rates in (a) to determine the
total and per-unit activity costs associated with each product. If required, round your answers to
two decimal places. Activity Rates and Product Costs Using Activity-Based Costing Brite Lite
Inc. manufactures entry and dining room lighting fixtures. Five activities are used in
manufacturing the fixtures. These activities and their associated activity costs and activity bases
are as follows: 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 for each
product and in total are provided in the table below.
Solution
Activity Activity cost (A) Cost Driver Total cost Driver (B) Cost per unit of cost driver (A)/(B)
=C Cost driver in Entry (D) Cost driver in Dining (E) Entry Cost C*(D) = F Dining Cost C*(E) =
G Per unit cost in Dining =F/Number of units produced Per unit cost in Entry = G/Number of
units produced Casting 42000 Machine hours 1400 30 800 600 24000 18000 20.00
36.00 Assembly 13500 Direct labour hours 900 15 500 400 7500 6000
6.25 12.00 Inspecting 5800 Number of inspections 290 20 140 150 2800 3000
2.33 6.00 Setup 16800 Number of setups 140 120 80 60 9600 7200
8.00 14.40 Materials Handling 3600 Number of loads 90 40 90 40 3600
1600 3.00 3.20
