Problem - Activity Rates and Activity-Based Product Costing
Hammer Company produces a variety of electronic equipment. One of its plants produces two laser printers: the deluxe and the regular. At the beginning of the year, the following data were prepared for this plant:
| |
Deluxe |
Regular |
| Quantity |
100,000 |
800,000 |
| Selling price |
$900 |
$750 |
| Unit prime cost |
$529 |
$483 |
In addition, the following information was provided so that overhead costs could be assigned to each product:
| Activity Name |
Activity Driver |
Activity Cost |
Deluxe |
Regular |
| Setups |
Number of setups |
$3,000,000 |
300 |
200 |
| Machining |
Machine hours |
91,000,000 |
100,000 |
300,000 |
| Engineering |
Engineering hours |
6,700,000 |
50,000 |
100,000 |
| Packing |
Packing orders |
600,000 |
100,000 |
400,000 |
Required:
1. Calculate the overhead rates for each activity. If required, carry your answers out to the nearest cent.
2. Calculate the per-unit product cost for each product. Round your answers to the nearest whole dollar.