Activity-Based Rates
Gee Company produces two types of stereo units: deluxe and regular. Activity data follow:
|
|
Product-Costing Data
|
|
|
Activity Usage Measures
|
Deluxe
|
Regular Total
|
|
Units produced per year
|
5,000
|
50,000
|
55,000
|
|
Prime costs
|
$39,000
|
$369,000
|
$408,000
|
|
Direct labor hours
|
5,000
|
45,000
|
50,000
|
|
Machine hours
|
10,000
|
90,000
|
100,000
|
|
Production runs
|
10
|
5
|
15
|
|
Number of moves
|
120
|
60
|
180
|
| Activity Cost Data (Overhead Activities) |
|
Activity
|
Cost
|
|
Setups
|
$ 60,000
|
|
Material handling
|
30,000
|
|
Power
|
50,000
|
|
Testing
|
40,000
|
|
Total
|
$180,000
|
Required:
1. Calculate the consumption ratios for each activity.
2. Group activities based on the consumption ratios.
3. Calculate a rate for each pooled group of activities.
4. Using the pool rates, calculate unit product costs.