Question

BriteLite Inc. manufactures entry and dining room lighting fixtures. Five activities are used in manufacturing the fixtures. These activities and their associated activity costs and activity bases are as follows:

Activity	Activity Costs (Budgeted)		Activity Base
Casting	$42,000		Machine hours
Assembly	13,500		Direct labor hours
Inspecting	5,800		Number of inspections
Setup	16,800		Number of setups
Materials handling	3,600		Number of loads

Corporate records were obtained to estimate the amount of activity to be used by the two products. The estimated activity-base usage quantities and units produced for each product and in total are provided in the following table:

Activity Base		Entry		Dining		Total
Machine hours		800		600		1400
Direct labor hours		500		400		900
Number of inspections		140		150		290
Number of setups		80		60		140
Number of loads		50		40		90
Units produced		1,200		500		1,700

a. Determine the activity rate for each activity.

Activity	Activity Rate
Casting	$	mh
Assembly	$	dlh
Inspecting	$	/insp.
Setup	$	/setup
Materials handling	$	/load

b. Use the activity rates in (a) to determine the total and per-unit activity costs associated with each product. If required, round your answers to two decimal places.

	Entry Lighting Fixtures			Dining Room Lighting Fixtures
Casting	$			$
Assembly
Inspecting
Setup
Materials handling
Total activity cost	$			$
Number of units
Activity cost per unit	$			$

Answer 1

a
Activity	Activity Rate
Casting	30	=42000/1400
Assembly	15	=13500/900
Inspecting	20	=5800/290
Setup	120	=16800/140
Materials handling	40	=3600/90
b
	Entry Lighting Fixtures	Dining Room Lighting Fixtures
Casting	24000	18000
Assembly	7500	6000
Inspecting	2800	3000
Setup	9600	7200
Materials handling	2000	1600
Total activity cost	45900	35800
Number of units	1200	500
Activity cost per unit	38.25	71.60
Workings:
	Entry Lighting Fixtures	Dining Room Lighting Fixtures
Casting	=800*30	=600*30
Assembly	=500*15	=400*15
Inspecting	=140*20	=150*20
Setup	=80*120	=60*120
Materials handling	=50*40	=40*40