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Find the activity rate for each activity

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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:

ActivityActivity 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 $ $

 

Reference no: EM13508700

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