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 $475,000 Machine hours
Assembly 128,000 Direct labor hours
Inspecting 33,250 Number of inspections
Setup 43,650 Number of setups
Materials handling 22,950 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 6,000 13,000 19,000
Direct labor hours 4,800 3,200 8,000
Number of inspections 200 750 950
Number of setups 270 180 450
Number of loads 640 210 850
Units produced 2,200 3,800 6,000
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
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
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 $ $

Question

22-06-2022
Business

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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 $475,000 Machine hours
Assembly 128,000 Direct labor hours
Inspecting 33,250 Number of inspections
Setup 43,650 Number of setups
Materials handling 22,950 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 6,000 13,000 19,000
Direct labor hours 4,800 3,200 8,000
Number of inspections 200 750 950
Number of setups 270 180 450
Number of loads 640 210 850
Units produced 2,200 3,800 6,000
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
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
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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abiolataiwo2015 abiolataiwo2015 · Answer 1 · 2022-07-05T17:59:30+02:00

The Activity rate for each activity are: Casting $25 per machine hour, Assembly $16 per direct labor hours, Inspecting $35 per inspection, Setup $97 per setup, Materials Handling $27 per load.