Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire...

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Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire...

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		$355,800		Number of purchase orders
Scheduling		$219,600		Number of production orders
Materials handling		$486,900		Number of moves
Product development		$756,500		Number of engineering changes
Production		$1,495,300		Machine hours

	Number of Purchase Orders	Number of Production Orders	Number of Moves	Number of Engineering Changes	Machine Hours	Number of Units
Disk drives	4,060	430	1,250	15	2,000	1,800
Tape drives	2,500	125	530	7	9,900	4,300
Wire drives	11,500	820	4,300	21	10,100	2,200

Determine the activity-based cost for each disk drive unit.

a. $360.33

b. $19.7

c. $799

d. $211.1

business accounting

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Answer 1

Answer #1

cost per activity
activity	cost	level of activity	cost per activity
procurement	355800	18060	19.70
scheduling	219600	1375	159.71
material handling	486900	6080	80.08
product development	756500	43	17593.02
production	1495300	22000	67.97

activity based cost-disk drive
activity	cost	level of activity	total cost
procurement	19.70	4060	79982
scheduling	159.71	430	68675.3
material handling	80.08	1250	100100
product development	17593.02	15	263895.3
production	67.97	2000	135940
TOTAL COST			648592.6

tape drive
activity	cost	level of activity	total cost
procurement	19.70	2500	49250
scheduling	159.71	125	19963.75
material handling	80.08	530	42442.4
product development	17593.02	7	123151.1
production	67.97	9900	672903
TOTAL COST			907710.3

wire drives
activity	cost	level of activity	total cost
procurement	19.70	11500	226550
scheduling	159.71	820	130962.2
material handling	80.08	4300	344344
product development	17593.02	21	369453.4
production	67.97	10100	686497
TOTAL COST			1757807
Total cost disk drive = 648592.6/1800 = 360.33
Option "a" is CORRECT

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Answer 2

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