Lonsdale Inc. manufactures entry and dining room lighting fixtures. Five activities are used in manufacturing the fixtures. These activities and their associated budgeted activity costs and activity bases are as follows:
Activity |
Budgeted Activity Cost |
Activity Base |
|
| Casting | $250,900 | Machine hours | |
| Assembly | 154,000 | Direct labor hours | |
| Inspecting | 26,620 | Number of inspections | |
| Setup | 43,120 | Number of setups | |
| Materials handling | 45,120 | 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 follow:
| Activity Base | Entry | Dining | Total | |||
| Machine hours | 5,110 | 4,540 | 9,650 | |||
| Direct labor hours | 4,400 | 6,600 | 11,000 | |||
| Number of inspections | 1,840 | 580 | 2,420 | |||
| Number of setups | 230 | 50 | 280 | |||
| Number of loads | 740 | 200 | 940 | |||
| Units produced | 10,200 | 5,100 | 15,300 | |||
a. Determine the activity rate for each activity. If required, round the rate to the nearest dollar.
| Activity | Activity Rate | |
| Casting | $ | per machine hour |
| Assembly | $ | per direct labor hour |
| Inspecting | $ | per inspection |
| Setup | $ | per setup |
| Materials handling | $ | per load |
b. Use the activity rates in (a) to determine the total and per-unit activity costs associated with each product. Round the per unit amounts to the nearest cent.
| Product | Total Activity Cost | Activity Cost Per Unit |
| Entry Lighting Fixtures | $ | $ |
| Dining Room Lighting Fixtures | $ | $ |
| a | |||
| Activity | Activity rate | ||
| Casting | 26 | per machine hour | =250900/9650 |
| Assembly | 14 | per direct labor hour | =154000/11000 |
| Inspecting | 11 | per inspection | =26620/2420 |
| Setup | 154 | per setup | =43120/280 |
| Materials handling | 48 | per load | =45120/940 |
| b | |||
| Total Activity Cost | Activity Cost Per Unit | ||
| Entry Lighting Fixtures | 285640 | 28.00 | |
| Dining Room Lighting Fixtures | 234120 | 45.91 |
| Workings: | ||
| Entry Lighting Fixtures : | ||
| Casting | 132860 | =5110*26 |
| Assembly | 61600 | =4400*14 |
| Inspecting | 20240 | =1840*11 |
| Setup | 35420 | =230*154 |
| Materials handling | 35520 | =740*48 |
| Total Activity Cost | 285640 | |
| Divide by units | 10200 | |
| Activity Cost Per Unit | 28.00 | |
| Dining Room Lighting Fixtures : | ||
| Casting | 118040 | =4540*26 |
| Assembly | 92400 | =6600*14 |
| Inspecting | 6380 | =580*11 |
| Setup | 7700 | =50*154 |
| Materials handling | 9600 | =200*48 |
| Total Activity Cost | 234120 | |
| Divide by units | 5100 | |
| Activity Cost Per Unit | 45.91 |
Get Answers For Free
Most questions answered within 1 hours.