Question

Activity Rates Zapato Company produces two types of boots: vaquero and vaquera. There are four activities associated with the two products. Drivers for the four activities are as follows: Vaquero Vaquera Cutting hours 2,000 5,400 Assembly hours 2,850 4,650 Inspection hours 650 2,430 Rework hours 150 450 The following activity data have been collected: Cutting $162,800 Assembling $337,500 Inspecting $55,440 Reworking $39,000 Required: Calculate the activity rates that would be used to assign costs to each product. If required, round your answers to the nearest cent.

Answer 1

Rate per activity shall be:

Cutting = $22 per hour

Assembling = $45 per hour

Inspection = $18 per hour

Rework = $65 per hour

Step-by-step explanation:

As for the information provided:

There are four activities, accordingly their drivers are:

Cutting hours = 2,000 + 5,400 = 7,400

Assembly hours = 2,850 + 4,650 = 7,500

Inspection hours = 650 + 2,430 = 3,080

Rework hours = 150 + 450 = 600

Cost associated with these activities are as follows:

Cutting = $162,800

Assembling = $337,500

Inspecting = $55,440

Reworking = $39,000

Rate per activity shall be:

Cutting = $162,800/7,400 = $22 per hour

Assembling = $337,500/7,500 = $45 per hour

Inspection = $55,440/3,080 = $18 per hour

Rework = $39,000/600 = $65 per hour