Product Costs using Activity Rates Hercules Inc. manufactures elliptical exercise machines and treadmills. The products...
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Accounting
Product Costs using Activity Rates
Hercules 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
$20
per machine hour
Assembly
$10
per direct labor hour
Setup
$54
per setup
Inspecting
$29
per inspection
Production scheduling
$11
per production order
Purchasing
$8
per purchase order
The activity-base usage quantities and units produced for each product were as follows:
Activity Base
Elliptical Machines
Treadmill
Machine hours
1,711
1,009
Direct labor hours
477
186
Setups
51
16
Inspections
718
431
Production orders
63
13
Purchase orders
201
123
Units produced
261
175
Use the activity rate and usage information to determine 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
$
$
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