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	$22	per machine hour
Assembly	$17	per direct labor hour
Setup	$53	per setup
Inspecting	$31	per inspection
Production scheduling	$18	per production order
Purchasing	$15	per purchase order

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

Activity Base	Elliptical Machines		Treadmill
Machine hours	1,957		1,155
Direct labor hours	386		151
Setups	46		14
Inspections	603		362
Production orders	73		15
Purchase orders	189		115
Units produced	259		174

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	Activity Rate
	Fabrication	22.00	per machine hour			Activity Base	Elliptical Machines	Treadmill
	Assembly	17.00	per direct labor hour			Machine hours	1,957	1,155
	Setup	53.00	per setup			Direct labor hours	386	151
	Inspecting	31.00	per inspection			Setups	46	14
	Production scheduling	18.00	per production order			Inspections	603	362
	Purchasing	15.00	per purchase order			Production orders	73	15
						Purchase orders	189	115
	Allocation of Overheads to Products:	Elliptical Machines	Treadmill
	Fabrication	43054	25410	(Activity Used * Activity Rate)
	Assembly	6562	2567
	Setup	2438	742
	Inspecting	18693	11222
	Production scheduling	1314	270
	Purchasing	2835	1725
	Total Activity Cost	74896	41936
	Units produced	259	174
	Activity Cost PU	289.2	241.0