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	$27	per machine hour
Assembly	$9	per direct labor hour
Setup	$51	per setup
Inspecting	$31	per inspection
Production scheduling	$10	per production order
Purchasing	$7	per purchase order

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

Activity Base	Elliptical Machines		Treadmill
Machine hours	1,924		1,135
Direct labor hours	447		174
Setups	59		18
Inspections	676		406
Production orders	77		15
Purchase orders	173		106
Units produced	248		166

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

• All working forms part of the answer
• Workings

			Elliptical Machines		Treadmill
Activity	Activity Rate		No. of cost drivers	Activity Cost	No. of cost drivers	Activity Cost
Fabrication	$                                27.00	per machine hour	1,924	$         51,948.00	1,135	$        30,645.00
Assembly	$                                  9.00	per direct labor hour	447	$           4,023.00	174	$          1,566.00
Setup	$                                51.00	per setup	59	$           3,009.00	18	$              918.00
Inspecting	$                                31.00	per inspection	676	$         20,956.00	406	$        12,586.00
Production scheduling	$                                10.00	per production order	77	$               770.00	15	$              150.00
Purchasing	$                                  7.00	per purchase order	173	$           1,211.00	106	$              742.00
			TOTAL	$         81,917.00	TOTAL	$        46,607.00
			Units	248	Units	166
			Activity Cost per unit	$               330.31		$              280.77

• Answers

	Total Activity Cost	Activity Cost Per Unit
Elliptical Machines	$ 81,917.00	$ 330.31
Treadmill	$ 46,607.00	$ 280.77