Question

1. Activity Rates and Activity-Based Product Costing

   Hammer Company produces a variety of electronic equipment. One of its plants produces two laser printers: the deluxe and the regular. At the beginning of the year, the following data were prepared for this plant:

   	Deluxe	Regular
   Quantity	100,000	800,000
   Selling price	$900	$750
   Unit prime cost	$529	$483

   In addition, the following information was provided so that overhead costs could be assigned to each product:

   Activity Name	Activity Driver	Deluxe	Regular	Activity Cost
   Setups	Number of setups	300	200	$2,150,000
   Machining	Machine hours	100,000	300,000	40,000,000
   Engineering	Engineering hours	50,000	100,000	9,000,000
   Packing	Packing orders	100,000	400,000	250,000

   Required:

   1. Calculate the overhead rates for each activity. If required, carry your answers out to the nearest cent.

   Setups	$ per setup
   Machining	$ per machine hour
   Engineering	$ per engineering hour
   Packing	$ per packing order

   2. Calculate the per-unit product cost for each product. Round your answers to the nearest whole dollar.

   Deluxe	$per unit
   Regular	$per unit

Answer 1