Reference no: EM132690665

Problem - Activity cost pools, activity rates, and product costs using activity-based costing

Kitchen Mate, Inc., is estimating the activity cost associated with producing ovens and refrigerators. The indirect labor can be traced into four separate activity pools, based on time records provided by the employees. The budgeted activity cost and activity-base information are provided as follows:

Activity	Activity Pool Cost	Activity Base
Procurement	$121,000	Number of purchase orders
Scheduling	8,140	Number of production orders
Materials handling	21,000	Number of moves
Product development	22,440	Number of engineering changes
Total cost	$172,580

The estimated activity-base usage and unit information for Top Chef's two product lines was determined from corporate records as follows:

	Number of Purchase Orders	Number of Production Orders	Number of Moves	Number of Engineering Changes	Units
Ovens	700	250	420	120	2,000
Refrigerators	400	120	280	50	1,541
Totals	1,100	370	700	170	3,541

Required -

a. Determine the activity rate for each activity cost pool.

b. Determine the activity-based cost per unit of each product.