Question

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	$27	per machine hour
Assembly	$13	per direct labor hour
Setup	$49	per setup
Inspecting	$26	per inspection
Production scheduling	$14	per production order
Purchasing	$11	per purchase order

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

Activity Base	Elliptical Machines		Treadmill
Machine hours	1,786		1,054
Direct labor hours	393		153
Setups	61		19
Inspections	642		385
Production orders	77		15
Purchase orders	215		131
Units produced	298		200

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	$	$

Answer 1

Activity		Elliptical Machines			Treadmill
	Activity Base	Activity (i)	Activity rate (ii)	Activity cost (i) x (ii)	Activity (iii)	Activity rate (iv)	Activity cost (iii) x (iv)
Fabrication	Machine hours	1,786	27	48,222	1,054	27	28,458
Assembly	Direct labor hours	393	13	5,109	153	13	1,989
Setup	Setups	61	49	2,989	19	49	931
Inspecting	Inspections	642	26	16,692	385	26	10,010
Production scheduling	Production orders	77	14	1,078	15	14	210
Purchasing	Purchase orders	215	11	2,365	131	11	1,441
	Total			$76,455			$43,039

	Total Activity Cost	Activity Cost Per Unit
Elliptical Machines	$76,455	76,455/298 = $256.6
Treadmill	$43,039	43,039/200 = $215.2

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