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13 November, 08:19

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.

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Answers (1)
  1. 13 November, 11:38
    0
    (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
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