Question
Activity Rates and Activity-Based Product Costing
Hammer Company produces a variety of electronic equipment. One of its plants produces two laser printers: the deluxe and the regular. At the beginning of the year, the following data were prepared for this plant:
Deluxe Regular
Quantity 100,000 800,000
Selling price $900 $750
Unit prime cost $529 $483
In addition, the following information was provided so that overhead costs could be assigned to each product:
Activity Name Activity Driver Activity Cost Deluxe Regular
Setups Number of setups $3,000,000 300 200
Machining Machine hours 91,000,000 100,000 300,000
Engineering Engineering hours 6,700,000 50,000 100,000
Packing Packing orders 600,000 100,000 400,000
Required:
1. Calculate the overhead rates for each activity. If required, carry your answers out to the nearest cent.
Setups $ per setup
Machining $ per machine hour
Engineering $ per engineering hour
Packing $ per packing order
2. Calculate the per-unit product cost for each product. Round your answers to the nearest whole dollar.
Deluxe $per unit
Regular
$per unit
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