Product Costs using Activity Rates Atlas Enterprises Inc. manufactures elliptica
ID: 2545288 • Letter: P
Question
Product Costs using Activity Rates Atlas Enterprises 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 Fabrication Assembly Setup Inspecting Production scheduling Purchasing The activity-base usage quantities and units produced for each product were as follows Activity Base Machine hours DIrect labor hours Setups Inspections Production orders Purchase orders Units produced Activity Rate $30 per machine hour $13 per direct labor hour $52 per setup $22 per Inspection $14 per production order $11 per purchase order Elliptical Machines Treadmill 1,878 453 61 660 71 195 240 1,108 19 396 119 161Explanation / Answer
Answer
Elliptical Machines
TreadMills
Activities
Activity rates $ -(A)
No. of activities (B)
Cost allocated (A x B)
No. of activities (C )
Cost allocated (A x C)
Fabrication
30
1878
56340
1108
33240
Assembly
13
453
5889
177
2301
Setup
52
61
3172
19
988
Inspecting
22
660
14520
396
8712
Production scheduling
14
71
994
14
196
Purchasing
11
195
2145
119
1309
Total cost allocated
$83060
Total cost allocated
$46746
Total Units
240
Total Units
161
Activity cost per unit
$346.083
Activity cost per unit
$290.3478
Total Activity Cost
Activity Cost per unit
Elliptical Machines
$83060
$346.08
Tread Mills
$46746
$290.35
Elliptical Machines
TreadMills
Activities
Activity rates $ -(A)
No. of activities (B)
Cost allocated (A x B)
No. of activities (C )
Cost allocated (A x C)
Fabrication
30
1878
56340
1108
33240
Assembly
13
453
5889
177
2301
Setup
52
61
3172
19
988
Inspecting
22
660
14520
396
8712
Production scheduling
14
71
994
14
196
Purchasing
11
195
2145
119
1309
Total cost allocated
$83060
Total cost allocated
$46746
Total Units
240
Total Units
161
Activity cost per unit
$346.083
Activity cost per unit
$290.3478
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