Reference no: EM132690674

Problem - Product costs using activity rates

Cardio Care, Inc., manufactures stationary bicycles 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	$24 per machine hour
Assembly	$10 per direct labor hour
Setup	$50 per setup
Inspecting	$24 per inspection
Production scheduling	$11 per production order
Purchasing	$9 per purchase order

The activity-base usage quantities and units produced for each product were as follows:

Activity Base	Stationary Bike	Treadmill
Machine hours	1,750	965
Direct labor hours	450	156
Setups	49	15
Inspections	320	310
Production orders	60	10
Purchase orders	190	100
Units produced	500	160

Required - Use the activity rate and usage information to calculate the total activity cost and activity cost per unit for each product.