Question

Simplifying the ABC System: Equally Accurate Reduced ABC Systems 0.3 Selected activities and other information are provided for Patterson Company for its most recent year of operations. Expected Consumption Ratios Activity Driver Quantity Wafer A Wafer B 7. Inserting dies Number of dies 2,500,000 Number of purchase 8. Purchasing materials 1,500 0.2 0.8 orders 1. Developing test programs Engineering hours 10,500 0.25 0.75 3. Testing products Test hours 18,500 0.6 0.4 ABC assignments $135,000 $135,000 Total overhead cost $270,000 Required: 1. Form reduced system cost pools for activities 7 and 8. Do not round interim calculations. Round your final answers to the nearest dollar. Inserting dies cost pool Purchasing cost pool 2. Assign the costs of the reduced system cost pools to Wafer A and Wafer B. Do not round interim calculations. Round your final answers to the nearest dollar. L Wafer A Wafer B $0

THIS IS FOR COST ACCOUNTING COURSE TEXTBOOK CORNERSTONE OF COST MANAGEMENT EXERCISE 4.10

Answer 1

Ansaco- 1. (0.7 -0.3=0.4) * Inserting dres Cost peol (270,000 x 0-6/1) - $ 162,000 + puochasping cost pool (270,000x0.4/1) - $ 108,000 2. + wafer A $ 135,000 + hafeo B $135.000 Wafes at $162.000X0.7 = $113,400 + $ 21,600 = $135,000 Cearen B ($108,000 X 0.2 = $21,600) Poo B, SO60.7€02 Do 0-3 0-8 3. fom Jedeeced System Cost pools Foo achtMes 1&3 Do not oond Poteofm Calculators.oound your freel answers to the nearest dolico Developing test poogdams Cost pool $ 77,143 C$ 270,000 x 0-20/0-70) * Teshing poodeects Cost pool $ 192,857 ($ 290,000x 0.5010.70) Co.75-0.25=0.50) => 0.50 +0.20= 0.70 Co-6-04 = 0.20) Assign the costs of the redeeced system cost pools to water Ae waleo B + Wales A $135,000 ($77,143 x 0.25) = $ 19286 *Wafer B $ 135,000 6 192,857 x 0-6) = $ 115,714 C$ 19286 +$115,714 =$135,000) For B, sub 0.25 € 0.6 for o75 & 0.4