Sweet 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 overhead required by the critical activities of the organization as follows:
Activity Budgeted Activity Cost
Production $496,800
Setup 266,400
Inspection 96,800
Shipping 171,600
Customer service 78,400
Total $1,110,000
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 Customer
Service
Requests Units
White sugar 3,170 150 220 880 70 7,925
Brown sugar 2,020 230 330 2,420 440 5,050
Powdered sugar 2,010 220 550 1,100 190 5,025
Total 7,200 600 1,100 4,400 700 18,000
Each product requires 0.9 machine hour per unit.
Required:
If required, round all per unit amounts to the nearest cent.
1. Determine the activity rate for each activity.
Production $fill in the blank 1 per machine hour
Setup $fill in the blank 2 per setup
Inspection $fill in the blank 3 per move
Shipping $fill in the blank 4 per cust. ord.
Customer service $fill in the blank 5 per customer service request
2. Determine the total and per-unit activity cost for all three products