Purchase Solution

# Activity Cost Rates

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I am in need of assistance producing activity cost rates for the following and a bill of activities, activity-based costing per unit.

Noor Company produces four versions of its model J17-21 bicycle seat. The four versions have different shapes, but their processing operations and production costs are identical. During July, these costs were incurred:
Direct materials
Leather \$25,430
Metal frame 39,180
Bolts 3,010

Material handling
Labor 8,232
Equipment depreciation 4,410
Electrical power 2,460
Maintenance 5,184

Assembly
Direct labor 13,230

Engineering design
Labor 4,116
Electrical power 1,176

Equipment depreciation 7,056
Indirect labor 37,870
Supervision 17,640
Operating supplies 4,410
Electrical power 10,584
Repairs and maintenance 21,168

July's output totaled 29,400 units. Each unit requires three machine hours of effort. Materials handling costs are allocated to the products based on direct materials cost, engineering design costs are allocated based on units produced, and overhead is allocated based on machine hours. Assembly costs are allocated based on direct labor hours, which are estimated at 882 for July.

During July, Noor Company completed 500 bicycle seats for job 142. The activity usage for job 142 was as follows: direct materials, \$1,150; direct labor hours, 15.

1. Compute the following activity cost rates: (a) materials handling cost rate; (b) assembly cost rate, (c) engineering design cost rate, and (d) overhead rate.

2. Prepare a bill of activities for job 142.

3. Use activity-based costing to compute the job's total cost and product unit.

##### Solution Summary

This solution computes activity cost rates, prepares a bill of activities and computes the job's total cost and product unit.

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