Product Costs using Activity Rates Atlas Enterprises Inc man

Product Costs using Activity Rates 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 Fabrication Assembly Setup Inspecting Production scheduling Purchasing The activity-base usage quantities and units produced for each product were as follows: Activity Base Machine hours Direct labor hours Setups Inspections Production orders Purchase orders Units produced Activity Rate $25 per machine hour $9 per direct labor hour $46 per setup $22 per inspection $10 per production order $7 per purchase order Elliptical Machines Treadmill 1,135 180 19 421 1,924 462 702 68 199 318 121 213

Solution

Elliptical machines Treadmill Fabrication 1924*25=48100 1135*25=28375 Assembly 462*9=4158 180*9=1620 setup 61*46=2806 19*46=874 Inspection 702*22=15444 421*22=9262 production scheduling 68*10=680 14*10=140 Purchasing 199*7=1393 121*7=847 Total activity cost 72581 41118 number of units 318 213 Cost per unit 72581/318 =$ 228.24 41118/213=$ 193.04