Question

Activity Rates and Activity-Based Product Costing

Hammer Company produces a variety of electronic equipment. One of its plants produces two laser printers: the deluxe and the regular. At the beginning of the year, the following data were prepared for this plant:

	Deluxe	Regular
Quantity	100,000	800,000
Selling price	$900	$750
Unit prime cost	$529	$483

In addition, the following information was provided so that overhead costs could be assigned to each product:

Activity Name	Activity Driver	Deluxe	Regular	Activity Cost
Setups	Number of setups	300	200	$2,150,000
Machining	Machine hours	100,000	300,000	68,000,000
Engineering	Engineering hours	50,000	100,000	13,500,000
Packing	Packing orders	100,000	400,000	450,000

Required:

1. Calculate the overhead rates for each activity. If required, carry your answers out to the nearest cent.

Setups	$ per setup
Machining	$ per machine hour
Engineering	$ per engineering hour
Packing	$ per packing order

2. Calculate the per-unit product cost for each product. Round your answers to the nearest whole dollar.

Deluxe	$per unit
Regular	$per unit

Answer 1