FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Pure Cane Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory
Activity
Activity Costs
Production
$247,500
Setup
48,000
Inspection
12,500
Shipping
69,300
Customer service
27,600
Total
$404,900
The activity bases identified for each activity are as follows:
Activity
Activity Base
Production
Machine hours
Setup
Number of setups
Inspection
Number of inspections
Shipping
Number of customer orders
Customer service
Number of customer service requests
The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows:
Machine
Hours
Number of
Setups
Number of
Inspections
Number of
Customer
Orders
Number of
Customer
Service
Requests
Units
White sugar
2,000
50
100
410
25
8,000
Brown sugar
1,250
70
160
1,100
200
5,000
Powdered sugar
1,250
80
240
800
120
5,000
Total
4,500
200
500
2,310
345
18,000
Each product requires 0.25 machine hour per unit.
Required:
1. Determine the activity rate for each activity.
2. Determine the total and per-unit activity costs for all three products. Round "Activity cost per unit" answers to two decimal places.
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