Reference no: EM132755150

Question - Product Costs using Activity Rates

Hercules Inc. manufactures elliptical exercise machines 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 $32 per machine hour

Assembly $10 per direct labor hour

Setup $54 per setup

Inspecting $25 per inspection

Production scheduling $11 per production order

Purchasing $8 per purchase order

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

Activity Base Elliptical Machines Treadmill

Machine hours 1,842 1,087

Direct labor hours 409 160

Setups 50 16

Inspections 684 410

Production orders 76 15

Purchase orders 172 105

Units produced 287 192

Use the activity rate and usage information to determine the total activity cost and activity cost per unit for each product. If required, round the per unit answers to the nearest cent.