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


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

Calculate the overhead cost per unit. Round your answers to the nearest cent.

 Overhead 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.

 Cost assignmentBasic$ Advanced$

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