CardioTrainer Equipment Company manufactures stationary bicycles and treadmills. The products are produced in the Fabrication and Assembly production departments

CardioTrainer Equipment Company manufactures stationary bicycles and treadmills. The products are produced in the 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                   | $22 per machine hour (mh)
Assembly                     | $12 per direct labor hour (dlh)
Setup                            | $40 per setup
Inspecting                    | $18 per inspection
Production scheduling | $8 per production order
Purchasing                   | $5 per purchase order

The activity-base usage quantities and units produced for each product were as follows:

                    Stationary Bicycle | Treadmill
Machine hours                 1,680 | 1,070
Direct labor hours               243 | 131
Setups                                   45 | 20
Inspections                         158 | 94
Production orders                 60 | 32
Purchase orders                  240 | 98
Units produced                   500 | 350

Use the activity rate and usage information to compute the total activity costs and the activity costs per unit for each product.


Answer:

Stationary Bicycle Treadmill 
Activity- 
Base Activity Activity 
Usage × Rate = Cost 
Activity- 
Base Activity Activity 
Usage × Rate = Cost 
Fabrication 1,680  mh $22  /mh $36,960 1,070  mh $22  /mh $23,540 
Assembly 243  dlh $12  /dlh 2,916 131  dlh $12  /dlh 1,572 
Setup 45  setups $40  /setup 1,800 20  setups $40  /setup 800 
Inspecting 158  insp. $18  /insp. 2,844 94  insp. $18  /insp. 1,692 
Production       
scheduling 60  prod. orders $8  /prod. order 480 32  prod. orders $8  /prod. order 256 
Purchasing 240  purch. ord. $5  /purch. ord. 1,200 98  purch. ord. $5  /purch. ord. 490 
Total $46,200  $28,350 
÷ Number of units ÷ 500  ÷ 350 
Activity cost per unit $92.40  $81.00