Activity Rates Cinturas Company produces two types of men’s shirts: casual and formal. There are four activities associated with the two products. Drivers for the four activities are as follows: Casual Formal Cutting hours 12,000 18,000 Sewing hours 3,000 7,000 Inspection hours 2,000 4,000 Rework hours 400 600 The following activity data have been collected: Cutting $90,000 Sewing 100,000 Inspecting 36,000 Reworking 20,000 Required: Calculate the activity rates that would be used to assign costs to each product. Cutting $ per Cutting hour Sewing $ per Sewing hour Inspecting $ per Inspecting hour Reworking $ per Reworking hour
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Activity Rates
Cinturas Company produces two types of men’s shirts: casual and formal. There are four activities associated with the two products. Drivers for the four activities are as follows:
| Casual | Formal | |||||
| Cutting hours | 12,000 | 18,000 | ||||
| Sewing hours | 3,000 | 7,000 | ||||
| Inspection hours | 2,000 | 4,000 | ||||
| Rework hours | 400 | 600 |
The following activity data have been collected:
| Cutting | $90,000 |
| Sewing | 100,000 |
| Inspecting | 36,000 |
| Reworking | 20,000 |
Required:
Calculate the activity rates that would be used to assign costs to each product.
| Cutting | $ per Cutting hour |
| Sewing | $ per Sewing hour |
| Inspecting | $ per Inspecting hour |
| Reworking | $ per Reworking hour |
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