(Solution) - Southeastern Paper Company manufactures three products computer paper newsprint and -(2025 Original AI-Free Solution)

Paper Details

Southeastern Paper Company manufactures three products (computer paper, newsprint, and specialty paper) 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:
Activity Activity Costs
Production.............................................................................. $220,000
Setup ...................................................................................... 117,000
Moving ...................................................................................... 21,000
Shipping .................................................................................... 105,000
Product engineering........................................................................ 102,000
Total ................................................................................... $565,000

The activity bases identified for each activity are as follows:
Activity Activity Base
Production........................................................................................ Machine hours

Setup................................................................................................. Number of setups
Moving............................................................................................. Number of moves
Shipping........................................................................................... Number of customer orders
Product engineering...................................................................... Number of test runs
The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows:

Each product requires 0.4 machine hour per unit.
Instructions
1. Determine the activity rate for each activity.
2. Determine the total and per-unit activity cost 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?