Question

Activity-Based Costing HealthTec Equipment Company manufactures stationary bicycles and treadmills. The products are produced in the 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 $33 per machine hour (mh) Assembly $12 per direct labor hour (dlh) Setup $50 per setup Inspecting $30 per inspection Production scheduling $14 per production order Purchasing $8 per purchase order The activity-base usage quantities and units produced for each product were as follows: Stationary Bicycle Treadmill Machine hours 1,920 1,020 Direct labor hours 480 210 Setups 40 20 Inspections 700 360 Production orders 80 50 Purchase orders 150 110 Units produced 1,000 1,000 Use the activity rate and usage information to compute the total activity costs and the activity costs per unit for each product. If required, round your answers to two decimal places. Activity Stationary Bicycle Activity Cost Treadmill Activity Cost Fabrication $ $ Assembly Setup Inspecting Production scheduling Purchasing Total $ $ Number of units Activity cost per unit $ $

Answer 1

Stationary bicycles	Activity rate	Activity	Amount
Fabrication	33	1920	63360
Assembly	12	480	5760
setup	50	40	2000
Inspecting	30	700	21000
Production scheduiling	14	80	1120
Purchasing	8	150	1200
Total activity cost			94440
Units produced			1000
Per unit cost			94.44
Treadmill	Activity rate	Activity	Amount
Fabrication	33	1020	33660
Assembly	12	210	2520
setup	50	20	1000
Inspecting	30	360	10800
Production scheduiling	14	50	700
Purchasing	8	110	880
Total activity cost			49560
Units produced			1000
Per unit cost			49.56