Activity-Based Costing Zeus Industries manufactures two types of electrical power units, custom and standard, which involve four factory overhead activities—production setup, procurement, quality...


Activity-Based Costing


Zeus Industries manufactures two types of electrical power units, custom and standard, which involve four factory overhead activities—production setup, procurement, quality control, and materials management. An activity analysis of the overhead revealed the following estimated activity costs and activity bases for these activities:









































Activity

Activity Cost

Activity Base
Production setup$ 44,000Number of setups
Procurement13,500Number of purchase orders (PO)
Quality control97,500Number of inspections
Materials management84,000Number of components
Total$239,000

The activity-base usage quantities for each product are as follows:





















































Setups

Purchase
Orders


Inspections

Components

Unit Volume
Custom2907601,2005002,000
Standard1101403002002,000
Total4009001,5007004,000


a.Determine an activity rate for each activity.














































Activity Rates

Production Setup

Procurement

Quality Control

Materials Management
Activity cost$fill in the blank 1$fill in the blank 2$fill in the blank 3$fill in the blank 4
÷ Activity basefill in the blank 5fill in the blank 6fill in the blank 7fill in the blank 8
Activity rate$fill in the blank 9/setup$fill in the blank 10/PO$fill in the blank 11/inspection$fill in the blank 12/component


b.Assign activity costs to each product and determine the unit activity cost, using the activity rates from part (a). Round unit cost to two decimal places.




























































Custom

Standard
Setups Total$fill in the blank 13$fill in the blank 14
Purchase Orders Totalfill in the blank 15fill in the blank 16
Inspections Totalfill in the blank 17fill in the blank 18
Components Totalfill in the blank 19fill in the blank 20
Total product cost$fill in the blank 21$fill in the blank 22
Unit volumefill in the blank 23fill in the blank 24
Unit cost$fill in the blank 25$fill in the blank 26


c.Assume that each product required one direct labor hour per unit. Determine the per-unit cost if factory overhead is allocated on the basis of direct labor hours. Round your answer to two decimal places.
$fill in the blank 27per unit



d.The custom product will consume   materials management activities than will the standard product.

Jun 10, 2022
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