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 2,300 5,400 Assembly hours 2,700 4,650 Inspection hours 800 2,430 Rework hours 150 450 The following activity data have been collected: Cutting $215,600 Assembling $330,750 Inspecting $58,140 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

(a) 28

(b) 45

(c) 18

(d) 65

Step-by-step explanation:

Total manufacturing costs:

= Cutting + Assembly + Inspecting + Rework

= $215,600 + $330,750 + $58,140 + $39,000

= $643,490

Total Cutting hours:

= Vacquero + Vaquera hours

= 2,300 + 5,400

= 7,700

Total Assembly hours:

= Vacquero + Vaquera hours

= 2,700 + 4,650

= 7,350

Total Inspection hours:

= Vacquero + Vaquera hours

= 800 + 2,430

= 3,230

Total rework hours:

= Vacquero + Vaquera hours

= 150 + 450

= 600

Therefore,

Activity rate = Total Cost ÷ Total hours

For cutting:

= $215,600 ÷ 7,700

= 28

For Assemble:

= $330,750 ÷ 7,350

= 45

For Inspection:

= $58,140 ÷ 3,230

= 18

For Rework:

= $39,000 ÷ 600

= 65