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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	$250,560		Machine hours
Assembly	179,860		Direct labor hours
Inspecting	35,980		Number of inspections
Setup	47,740		Number of setups
Materials handling	43,860		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	4,920		4,360		9,280
Direct labor hours	4,230		6,350		10,580
Number of inspections	1,950		620		2,570
Number of setups	250		60		310
Number of loads	680		180		860
Units produced	9,800		4,900		14,700

a. Determine the activity rate for each activity. If required, round the rate to the nearest dollar.

Activity	Activity Rate
Casting	$fill in the blank 1	per machine hour
Assembly	$fill in the blank 2	per direct labor hour
Inspecting	$fill in the blank 3	per inspection
Setup	$fill in the blank 4	per setup
Materials handling	$fill in the blank 5	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 amounts to the nearest cent.

Product	Total Activity Cost	Activity Cost Per Unit
Entry Lighting Fixtures	$fill in the blank 6	$fill in the blank 7
Dining Room Lighting Fixtures	$fill in the blank 8	$fill in the blank 9

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