Question

Endurance 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	$25 per machine hour
Assembly	$14 per direct labor hour
Setup	$47 per setup
Inspecting	$23 per inspection
Production scheduling	$12 per production order
Purchasing	$11 per purchase order

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

	Elliptical
Activity Base	Machines	Treadmills
Machine hours	709	463
Direct labor hours	239	79
Setups	22	9
Inspections	145	130
Production orders	23	8
Purchase orders	99	72
Units produced	322	187

Complete the Activity Tables for elliptical machines and treadmills. Use the activity rate and usage information to calculate the total activity cost and activity cost per unit for each product. If required, round per-unit answers to the nearest cent.

Answer 1

Calculation of total activity cost:
					Elliptical Machines			Treadmils
Activity			Activity Rate		Quantities	Total cost		Quantities	Total cost
			a		b	c=a*b		d	e=a*d
Fabrication			$          25		709	$ 17,725.00		463	$ 11,575.00
Assembly			$          14		239	$   3,346.00		79	$   1,106.00
Setup			$          47		22	$   1,034.00		9	$       423.00
Inspecting			$          23		145	$   3,335.00		130	$   2,990.00
Production Schedule			$          12		23	$       276.00		8	$         96.00
Purchasing			$          11		99	$   1,089.00		72	$       792.00
Total						$ 26,805.00			$ 16,982.00
Calculation of activity cost per unit:
				Total cost	Total Unit	Unit cost
	Elliptical Machines			$ 26,805.00	322	$         83.25
	Treadmils			$ 16,982.00	187	$         90.81
Thus,
				Elliptical Machines		Treadmils
	Total activity cost			$ 26,805.00		$ 16,982.00
	Activity cost per unit			$         83.25		$         90.81