Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to four separate activity pools. The budgeted activity cost and activity base data by product are provided below.
- Activity Cost Activity Base
- Procurement $370,000 Number of purchase orders
- Scheduling 250,000 Number of production orders
- Materials handling 500,000 Number of moves
- Product development 730,000 Number of engineering changes
- Production 1,500,000 Machine hours
Number of Number of Number of Number of Machine Number of Purchase Orders Production Orders Moves Engineering Changes Hours Units
- Disk drives 4,000 300 1,400 10 2,000 2,000
- Tape drives 4,000 150 800 10 8,000 4,000
- Wire drives 12,000 800 4,000 25 10,000 2,500
1. Determine the activity rate for procurement per purchase order.
a $43.53
b $18.50
c $15.42
d $37.00
2. Determine the activity rate per production order for scheduling.
a $200.00
b $20.00
c $29.41
d $10.42
3. Determine the activity rate for materials handling per move.
a $58.82
b $50.00
c $20.83
d $80.65
4. Determine the activity rate for product development per change.
a $73,000
b $8,588
c $30,417
d $16,222
5. Determine the activity rate for production per machine hour.
a $62.50
b $150.00
c $75.00
d $176.47
6. Determine the activity-based cost for each disk drive unit.
a $92.25
b $130.69
c $394.12
d $279.57
7. Determine the activity-based cost for each wire drive unit.
a $204.13
b $173.51
c $744.06
d $394.12
8. Determine the activity-based cost for each tape drive unit.
a $97.73
b $232.69
c $394.12
d $103.84