Question

Atlas Enterprises Inc. manufactures elliptical exercise machines and treadmills. The products are produced in its Fabrication...

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 Activity Rate
Fabrication $31 per machine hour
Assembly $17 per direct labor hour
Setup $46 per setup
Inspecting $32 per inspection
Production scheduling $18 per production order
Purchasing $15 per purchase order

The activity-base usage quantities and units produced for each product were as follows:

Activity Base Elliptical Machines Treadmill
Machine hours 1,742 1,028
Direct labor hours 485 189
Setups 43 13
Inspections 738 443
Production orders 75 15
Purchase orders 179 109
Units produced 310 208

Use the activity rate and usage information to calculate the total activity cost and activity cost per unit for each product. If required, round the per unit answers to the nearest cent.

Total Activity Cost Activity Cost Per Unit
Elliptical Machines $ $
Treadmill $ $

Homework Answers

Answer #1

Solution:

Computation of activity cost and activity cost per unit
Activity Activity Base Activity Rate Elliptical Machines Treadmill
Usage Allocated Costs Usage Allocated Costs
Fabrication Machine hours $31.00 1742 $54,002.00 1028 $31,868.00
Assembly Direct labor hours $17.00 485 $8,245.00 189 $3,213.00
Setup Nos setups $46.00 43 $1,978.00 13 $598.00
Inspecting Nos of inspection $32.00 738 $23,616.00 443 $14,176.00
Production Scheduling Nos production orders $18.00 75 $1,350.00 15 $270.00
Purchasing Nos of purchase orders $15.00 179 $2,685.00 109 $1,635.00
Total $91,876.00 $51,760.00
Nos of units produced 310 208
Activity cost per unit $296.37 $248.85
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