Pure Cane Sugar Company manufactures three products (white sugar, brown sugar, a

Question

Pure Cane Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) 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:

Each product requires 0.25 machine hour per unit.

QUESTIONS:

Required:

1. Determine the activity rate for each activity.

2. Determine the total and per-unit activity costs for all three products. Round "Activity cost per unit" answers to two decimal places.

Activity Rate Production ?? $ /mh Setup ?? $ /setup Inspection ?? $ /insp. Shipping ?? $ /cust. ord. Customer Service ?? $ /req.

Explanation / Answer

Production 247500/4500 = 55 per MH set up 48000/200 = 240 Per set up Inspection 12500 /500 = 25 per insp shipping 69300 / 2310 = 30 per cust.ord Customer service 27600 / 345 = 80 per req White sugar Brown sugar Powdered sugar Production (55*number of production) 110000    [2000*55] 68750    [1250*55] 68750 Set up    (240 *set up] 12000    [240*50] 16800 19200 Inspection [25* inspection] 2500 4000 6000 shipping    [30*shipping] 12300 33000 24000 customer    [80*reques] 2000 16000 9600 Total cost (A) 138800 138550 127550 Number f unit (B( 8000 5000 5000 Activity cost per unit (A/B) 17.35 27.71 25.51

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