Question

Product Costs using Activity Rates Atlas Enterprises Inc, manufactures elliptical exercise machines and treadmills. The products are produced in its Fabrication and Assembly production departments. In addition to production activities, several other activities are required to produce the two products. These activities and their associated activity rates are as follows: Activity Activity Rate Fabrication $27 per machine hour Assembly $12 per direct labor hour Setup $49 per setup Inspecting $32 per inspection Production scheduling $13 per production order Purchasing $10 per purchase order The activity-base usage quantities and units produced for each product were as follows: Activity Base Elliptical Machines Treadmill Machine hours 1,885 1,112 Direct labor hours 434 169 Setups Inspections Production orders Purchase orders Units produced 2:29 PM

Answer 1

Answer Activity Based casting (ABC systery). H: An Organisation has squired wenjoys overhead costs to produce the finishel goots Question anises how to I allocate there corts to each product us - This has been solved by ABC criting system ic Activity Barel casting System. Costs are allocated on the bois of the cost driver of such activity. ABC cesting system is better then tradita ang) waling system as in traditional Lorting costs are allocated on single cest driverouhich is irrelevante

L. Gabay1qty09_Of Total activity Gast for each_prodyu! Total activity best is calculated by the cost driver volume or ysage_multiplied by the activity Byte - Atlas Enterprise Inc - Schedule of Toby)_actly G! nility Activity Adilly Totyl Adjuly Bque Bite ادم Cost Driver Volume Elliptical Treadmill machine cd ellphiaTrepqimid) Machine f-cke 19dxe Machine Hoye 1885 Direct labous Hey | 434 Fabrication Assembly Selle Inspecting hol410109 scheduling Inspections pultelion orders narchase orders 50895 30024 5208 | 2028 289| 23776 14272 1034 | 1890 I 1150 208 Perchasing 18g | 115 Total Activity cost 856741 48564 ] (Glylation of Adinity cost per unit Activity Cost per unit is calullabel by toty) activity ac cost divided by the number of units Ploticed. u Partiyl915 Telliptical Machine Treadmi) 4 Total_Activity cost | 85674 48564 Number of unit Rothed I Activity Gost per unt L 300. 6 2 54.26 285

- The answers are Ell jptjcq] machines Frage hill Totul. Achit by Gost Actiully cost per Unit 85674 300.6 1 48564 1 254.26