Reference no: EM13508700

Alabama Paper Company manufactures three products (computer paper, newsprint, and specialty paper) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows:

Activity		Activity Cost Pool
Production			$430,700
Setup			165,600
Moving			70,200
Shipping			149,600
Product Engineering			44,800
	Total		$860,900

The activity bases identified for each activity are as follows:

Activity	Activity Base
Production	Machine hours
Setup	Number of setups
Moving	Number of moves
Shipping	Number of customer orders
Product Engineering	Number of test runs

The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows:

		Machine Hours	Number of Setups	Number of Moves	Number of Customer Orders	Number of Test Runs	Units
Computer Paper		3,210	100	180	880	40	8,025
Newsprint		2,040	150	270	2,420	250	5,100
Specialty Paper		2,050	150	450	1,100	110	5,125
	Total	7,300	400	900	4,400	400	18,250

Each product requires 0.9 machine hour per unit.

If required, round all per unit amounts to the nearest cent.

1. Determine the activity rate for each activity.

Production	$ per machine hour
Setup	$ per setup
Moving	$ per move
Shipping	$ per cust. ord.
Product Engineering	$ per test run

2. Determine the total and per-unit activity cost for all three products. Round per unit answers to the nearest cent.

	Total Activity Cost	Activity Cost per Unit
Computer Paper	$	$
Newsprint	$	$
Specialty Paper	$	$