Activity Rates Zapato Company produces two types of boots: vaquero and vaquera. There are four activities associated with the two products. Drivers for the four activities are as follows: Vaquero Vaquera Cutting hours 2,300 5,400 Assembly hours 2,700 4,650 Inspection hours 800 2,430 Rework hours 150 450 The following activity data have been collected: Cutting $215,600 Assembling $330,750 Inspecting $58,140 Reworking $39,000

Required:

Calculate the activity rates that would be used to assign costs to each product. If required, round your answers to the nearest cent.

(a) 28

(b) 45

(c) 18

(d) 65

Explanation:

Total manufacturing costs:

= Cutting + Assembly + Inspecting + Rework

= $215,600 + $330,750 + $58,140 + $39,000

= $643,490

Total Cutting hours:

= Vacquero + Vaquera hours

= 2,300 + 5,400

= 7,700

Total Assembly hours:

= Vacquero + Vaquera hours

= 2,700 + 4,650

= 7,350

Total Inspection hours:

= Vacquero + Vaquera hours

= 800 + 2,430

= 3,230

Total rework hours:

= Vacquero + Vaquera hours

= 150 + 450

= 600

Therefore,

Activity rate = Total Cost : Total hours

For cutting:

= $215,600 : 7,700

= 28

For Assemble:

= $330,750 : 7,350

= 45

For Inspection:

= $58,140 : 3,230

= 18

For Rework:

= $39,000 : 600

= 65