Reference no: EM133128072

Question - Activity-Based Product Costing - Davis Company produces two hair dryers: regular and deluxe. The company has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below.

	Regular	Deluxe	Total
Units produced	120,000	360,000	-
Prime costs	$9,600,000	$41,760,000	$51,360,000
Machine hours	120,000	600,000	720,000
Engineering hours	200	1,800	2,000
Receiving orders	400	1,200	1,600
Inspection hours	800	1,600	2,400
Overhead costs:
Machining	$10,800,000
Engineering	1,040,000
Receiving	624,000
Inspecting products	384,000

Required -

1. Calculate the four activity rates.

2. Calculate the unit costs using activity rates.

Calculate the overhead cost per unit.

3. If consumption ratios instead of activity rates were used to assign costs instead of activity rates, show the cost assignment for the inspection activity.