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 $ 75,000 Number of setups Procurement 120,750 Number of purchase orders (PO) Quality control 136,500 Number of inspections Materials management 129,500 Number of components Total $461,750 The activity-base usage quantities for each product are as follows: 三 Purchase Setups Inspections Components Unit Volume Orders Custom 500 850 1,700 400 1,000 Standard 100 200 400 300 1,000 Total 600 1,050 2,100 700 2,000 a. Determine an activity rate for each activity. Activity Rates Production Setup Procurement Quality Control Materials Management Activity cost + Activity base Activity rate $ /setup /PO $ /inspection /component
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 $ 75,000 Number of setups Procurement 120,750 Number of purchase orders (PO) Quality control 136,500 Number of inspections Materials management 129,500 Number of components Total $461,750 The activity-base usage quantities for each product are as follows: 三 Purchase Setups Inspections Components Unit Volume Orders Custom 500 850 1,700 400 1,000 Standard 100 200 400 300 1,000 Total 600 1,050 2,100 700 2,000 a. Determine an activity rate for each activity. Activity Rates Production Setup Procurement Quality Control Materials Management Activity cost + Activity base Activity rate $ /setup /PO $ /inspection /component
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 11E: Lonsdale Inc. manufactures entry and dining room lighting fixtures. Five activities are used in...
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