Panamint Systems Corporation is estimating activity costs associated with produc
ID: 2381536 • Letter: P
Question
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.
Determine the activity rate for product development per change. Round to the nearest cent.
Select the correct answer.
Activity Cost
Activity Base Procurement $372,109 Number of purchase orders Scheduling $216,467 Number of production orders Materials handling $444,994 Number of moves Product development $751,998 Number of engineering changes Production $1,522,649 Machine hours
Number of
Purchase
Orders Number
of
Production
Orders
Number
of
Moves
Number of Engineering
Changes
Machine
Hours
Number
of
Units Disk drives 3,936 317 1,415 11 1,770 2,013 Tape drives 1,880 226 549 5 8,264 3,707 Wire drives 12,294 967 3,938 23 10,645 2,548
Explanation / Answer
Determining the activity rate for product development per change. Round to the nearest cent.
Total production development Activity cost = 751998
Total number of engineering changes = 11+ 5+ 23 = 39
Activity rate for product development per change =Total production development Activity cost/Total number of engineering changes
Activity rate for product development per change = 751998/39
Activity rate for product development per change = 19282
Answer: $19,282
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