Question

1. Product Costs using Activity Rates

   Hercules 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	$26	per machine hour
   Assembly	$12	per direct labor hour
   Setup	$55	per setup
   Inspecting	$30	per inspection
   Production scheduling	$13	per production order
   Purchasing	$10	per purchase order

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

   Activity Base	Elliptical Machines		Treadmill
   Machine hours	1,998		1,179
   Direct labor hours	410		160
   Setups	45		14
   Inspections	615		369
   Production orders	72		14
   Purchase orders	209		127
   Units produced	296		198

   Use the activity rate and usage information to determine 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	$	$

Answer 1