# Cornerstone Exercise 4.5 (Algorithmic) Activity-Based Product Costing Roberts Company produces two weed eaters: basic and advanced. The company has…

Cornerstone Exercise 4.5 (Algorithmic)Activity-Based Product Costing

Roberts Company produces two weed eaters: basic and advanced. The company has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below.

Basic    Advanced    TotalUnits produced       80,000       240,000       ——

Prime costs      \$6,720,000       \$27,360,000       \$34,080,000

Machine hours       80,000       400,000       480,000

Engineering hours       500       4,500       5,000

Receiving orders       200       600       800

Inspection hours       800       1,600       2,400

Overhead costs:       Machining       \$7,200,000Engineering       2,250,000Receiving       192,000Inspecting products       336,000

Required:

1. Calculate the four activity rates.

Machining rate\$ per machine hourEngineering rate\$ per hourReceiving rate\$ per orderInspecting rate\$ per hour

2. Calculate the unit costs using activity rates. Round your answers to the nearest cent.

Unit costBasic\$ per unitAdvanced\$ per unit

3. What if consumption ratios instead of activity rates were used to assigned costs? Show the cost assignment for the inspection activity.

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