Accounting 26th Edition by Carl Warren ,Jim Reeve ,Jonathan Duchac

Exercise 3

Activity-based costing
Pure Cane Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows:

The activity bases identified for each activity are as follows:

The activity-base usage quantities and units produced for the three products were determined from corporate records as follows:

Each product requires 0.25 machine hour per unit.
Instructions
1. Determine the activity rate for each activity.
2. Determine the total and per-unit activity costs for all three products.
3. Why aren't the activity unit costs equal across all three products since they require the same machine time per unit