Panamint Systems Corporation is estimating activity costs associated with produc
ID: 2542335 • 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. Activity Cost Activity Base Procurement $374,500 Number of purchase orders Scheduling $215,800 Number of production orders Materials handling $422,600 Number of moves Product development $790,900 Number of engineering changes Production $1,577,100 Machine hours Number of Purchase Orders Number of Production Orders Number of Moves Number of Engineering Changes Machine Hours Number of Units Disk drives 4,030 300 1,370 14 2,100 2,400 Tape drives 2,400 155 510 3 9,300 4,300 Wire drives 11,000 950 4,200 24 10,900 2,700 Determine the activity rate for procurement per purchase order. a. $21.49 b. $70.72 c. $153.59 d. $266.55
Explanation / Answer
Option - a .......... 21.49 ..........is the correct answer
Explanation
Procurement cost ............... 374,500
Total number of purchase orders = 4030 + 2400 + 11000 = 17430 orders
Activity rate for procuement per purchase order = 374500 / 17430 = 21.49 per order
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