Question

Activity-Based Product Costing Roberts Company produces two weed eaters: basic and advanced. The company has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below. Basic Advanced Total Units produced 120,000 360,000 — Prime costs $10,560,000 $36,000,000 $46,560,000 Machine hours 120,000 600,000 720,000 Engineering hours 400 3,600 4,000 Receiving orders 400 1,200 1,600 Inspection hours 900 1,800 2,700 Overhead costs: Machining $10,800,000 Engineering 1,960,000 Receiving 432,000 Inspecting products 378,000 Required:

1. Calculate the four activity rates.

Machining rate $ per machine hour

Engineering rate $ per hour

Receiving rate $ per order

Inspecting rate $ per hour

2. Calculate the unit costs using activity rates. Round your answers to the nearest cent.

Unit cost Basic $ per unit

Advanced $ per unit

Calculate the overhead cost per unit. Round your answers to the nearest cent.

Overhead Cost Basic $ per unit

Advanced $ per unit 3.

If consumption ratios instead of activity rates were used to assign costs instead of activity rates, show the cost assignment for the inspection activity.

Cost assignment Basic $

Advanced $

Answer 1