Question

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	$215,740		Machine hours
Assembly	203,110		Direct labor hours
Inspecting	35,520		Number of inspections
Setup	49,830		Number of setups
Materials handling	46,280		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	4,970		4,410		9,380
Direct labor hours	4,280		6,410		10,690
Number of inspections	1,690		530		2,220
Number of setups	270		60		330
Number of loads	700		190		890
Units produced	9,800		4,900		14,700

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	$	$

Answer 1

a.
	Activity	Activity Rate
	Casting ($215,740/9,380)	$23	per machine hour
	Assembly ($203,110/10,690)	$19	per direct labor hour
	Inspecting ($35,520/2,220)	$16	per inspection
	Setup ($49,830/330)	$151	per setup
	Materials handling ($46,280/890)	$52	per load
b.		Entry Lighting Fixtures	Dining Room Lighting Fixtures
	Casting	$114,310	$101,430
	Assembly	$81,320	$121,790
	Inspecting	$27,040	$8,480
	Setup	$40,770	$9,060
	Materials handling	$36,400	$9,880
	Total Activity Cost	$299,840	$250,640
	Activity Cost Per Unit	$30.60	$51.15
	($299,840/9,800), ($250,640/4,900)