Question - Activity cost pools, activity rates, and product costs using activity-based costing
Top Chef Inc. is estimating the activity cost associated with producing ovens and refrigerators. The indirect labor can be traced into four separate activity pools, based on time records provided by the employees. The budgeted activity cost and activity-base information are provided as follows:
|
Activity
|
Activity Pool Cost
|
Activity Base
|
|
Procurement
|
$151,200
|
Number of purchase orders
|
|
Scheduling
|
8,000
|
Number of production orders
|
|
Materials handling
|
24,850
|
Number of moves
|
|
Product development
|
26,820
|
Number of engineering changes
|
|
Total cost
|
$210,870
|
|
The estimated activity-base usage and unit information for Top Chef's two product lines was determined from corporate records as follows:
|
Number of
Purchase Orders
|
Number of
Production Orders
|
Number of
Moves
|
Number of
Engineering Changes
|
Units
|
|
Ovens
|
610
|
210
|
420
|
130
|
1,370
|
|
Refrigerators
|
590
|
110
|
290
|
50
|
1,040
|
|
Totals
|
1,200
|
320
|
710
|
180
|
2,410
|
a. Determine the activity rate for each activity cost pool. Round to the nearest whole dollar.
b. Determine the activity-based cost per unit of each product. Round to the nearest cent.