Question

Atlas Enterprises 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 $34 per machine hour
Assembly $14 per direct labor hour
Setup $46 per setup
Inspecting $26 per inspection
Production scheduling $14 per production order
Purchasing $8 per purchase order

The activity-base usage quantities and units produced for each product were as follows:

Elliptical
Activity Base Machines Treadmills
Machine hours 663 415
Direct labor hours 180 78
Setups 21 9
Inspections 119 181
Production orders 16 9
Purchase orders 90 50
Units produced 268 134

Required:
Use the activity rate and usage information to calculate the total activity cost and activity cost per unit for each product.

Answer 1

Results are below.

Step-by-step explanation:

First, we need to allocate overhead to each product:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Elliptical:

Fabrication= 34*663= 22,542

Assembly= 14*180= 2,520

Setup= 46*21= 966

Inspecting= 26*119= 3,094

Production scheduling= 14*16= 224

Purchasing= 8*90= 720

Total allocate cost= $30,066

Unitary cost= 30,066/268= $112.19

Treadmills:

Fabrication= 34*415= 14,110

Assembly= 14*78= 1,092

Setup= 46*9= 414

Inspecting= 26*181= 4,706

Production scheduling= 14*9= 126

Purchasing= 8*50= 400

Total allocate cost= $20,848

Unitary cost= 20,848/134= $155.58