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4.13 Activity rates and product costs using activity-based costing

Lonsdale Inc. manufactures entry and dining room lighting fixtures. Five activities are used in manufacturing the fixtures. These activities and their associated budgeted activity costs and activity bases are as follows:

Activity Budgeted Activity Cost Activity Base Casting $390,000 Machine hours Assembly 60,000 Direct labor hours Inspecting 36,000 Number of inspections Setup 54,000 Number of setups Materials handling 26,600 Number of loads Corporate records were obtained to estimate the amount of activity to be used by the two products. The estimated activity-base usage quantities and units produced follow:

Activity Base Entry Dining Total Machine hours 4,740 10,260 15,000 Direct labor hours 2,400 1,600 4,000 Number of inspections 580 420 1,000 Number of setups 360 240 600 Number of loads 610 340 950 Units produced 4,100 2,900 7,000 This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.

Activity rates and product costs using activity-based costing Lonsdale Inc. manufactures entry and dining room lighting fixtures. Five activities are used in manufacturing the fixtures. These activities and their associated budgeted activity costs and activity bases are as follows: Budgeted Activity Cost Activity Activity Base $390,000 Machine hours Casting Assembly 60,000 Direct labor hours Inspecting 36,000 Number of inspections 54,000 Number of setups 26,600 Number of loads Setup Materials handling Corporate records were obtained to estimate the amount of activity to be used by the two products. The estimated activity-base usage quantities and units produced follow: Activity Base Entry Dining Total 4,740 10,260 15,000 Machine hours Direct labor hours 2,400 1,600 4,000 580 420 1,000 Number of inspections Number of setups 360 240 600 Number of loads 610 340 950 Units produced 4,100 2,900 7,000 This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Open spreadsheet a. Determine the activity rate for each activity. If required, round the rate to the nearest dollar. Activity Activity Rate Casting $ per machine hour Assembly $ per direct labor hour Inspecting $ per inspection Setup $ per setup Materials handling $ per load b. Use the activity rates in (a) to determine the total and per-unit activity costs associated with each product. Round the per unit rates to the nearest cent. ) - Product Total Activity Cost Activity Cost Per Unit Entry Lighting Fixtures $ $ Dining Room Lighting Fixtures $ $

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