Activity Cost Pools, Activity Rates, and Product Costs using Activity-Based Costing Kitchen Wares In

Activity Cost Pools, Activity Rates, and Product Costs using Activity-Based Costing

Kitchen Wares Inc. is estimating the activity cost associated with producing ovens and refrigerators. The indirect labor can be traced into four separate activity pools, based on time records provided by the employees. The budgeted activity cost and activity-base information are provided as follows: Activity Activity Pool Cost Activity Base Procurement $139,700 Number of purchase orders Scheduling 7,600 Number of production orders Materials handling 29,230 Number of moves Product development 30,360 Number of engineering changes Total cost $206,890

The estimated activity-base usage and unit information for Kitchen Wares’ two product lines was determined from corporate records as follows: Number of
Purchase Orders Number of
Production Orders Number of
Moves Number of
Engineering Changes
Units Ovens 640 250 470 160 1,520 Refrigerators 630 130 320 60 1,140 Totals 1,270 380 790 220 2,660

a. Determine the activity rate for each activity cost pool. If required, round your answers to the nearest dollar. Procurement (per purchase order) $ Scheduling (per production order) $ Materials handling (per move) $ Product development (per engineering change) $

b. Determine the activity-based cost per unit of each product. Round your answers to the nearest cent. Ovens $ per unit Refrigerators $ per unit

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