Activity Rates Zapato Company produces two types of boots: cowboy and cowgirl. There are four activities associated with the two products. Drivers for the four activities are as follows: Cowboy Cowgirl Cuffing hours 2,100 3,900 Assembly hours 1,500 2,250 Inspection hours 675 1,575 Rework hours 75 225 The following activity data have been collected: Cutting $60,000 Assembling 75,000 Inspecting 1 8,000 Reworking 9,000 Required: Calculate the activity rates that would be used to assign costs to each product. If required, round your answers to the nearest cent. Cutting $ per cutting hour Assembling $ per assembling hour Inspecting $ per inspecting hour Reworking $ per reworking hour Solution The activity rates are computed as under .

1. Activity Rates Zapato Company produces two types of boots: cowboy and cowgirl. There are
four activities associated with the two products. Drivers for the four activities are as follows:
Cowboy Cowgirl Cuffing hours 2,100 3,900 Assembly hours 1,500 2,250 Inspection hours 675
1,575 Rework hours 75 225 The following activity data have been collected: Cutting $60,000
Assembling 75,000 Inspecting 1 8,000 Reworking 9,000 Required: Calculate the activity rates
that would be used to assign costs to each product. If required, round your answers to the nearest
cent. Cutting $ per cutting hour Assembling $ per assembling hour Inspecting $ per inspecting
hour Reworking $ per reworking hour
Solution
The activity rates are computed as under
Activity
Total Cost
($)
Total
Hours
Cost per
hour
Cost Allocated to
Cowboy
Cost Allocated to
Cowgirl
Cutting 60,000 6,000 10 21000 39,000
Assembling 75,000 3750 20 30,000 45,000
Inspection 18,000 2250 8 5400 12,600
Re-work 9,000 300 30 2250 6,750