Determine the total activity cost and activity cost per unit

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Problem - 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

$30 per machine hour

Assembly

$35 per direct labor hour

Setup

$90 per setup

Inspecting

$20 per inspection

Production scheduling

$19 per production order

Purchasing

$5 per purchase order

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

Activity Base

Elliptical Machines

Treadmills

Machine hours

600

400

Direct labor hours

190

223

Setups

30

30

Inspections

15

25

Production orders

40

30

Purchase orders

318

85

Units produced

500

320

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

Reference no: EM132760785

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