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		$374,100		Number of purchase orders
Scheduling		$208,600		Number of production orders
Materials handling		$478,000		Number of moves
Product development		$798,000		Number of engineering changes
Production		$1,461,200		Machine hours

	Number of Purchase Orders	Number of Production Orders	Number of Moves	Number of Engineering Changes	Machine Hours	Number of Units
Disk drives	4,190	380	1,440	15	1,700	2,500
Tape drives	1,900	195	500	5	9,800	4,000
Wire drives	11,000	880	4,400	26	11,000	2,300

Determine the activity rate for materials handling per move.

a. $21.89

b. $75.39

c. $143.37

d. $64.94

business accounting

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Answer 1

Answer #1

Total number of moves = 1,440 + 500 + 4,400

= 6,340

Activity rate for materials handling per move = Material handling cost/Total number of moves

= 478,000/6,340

= $75.39

Correct option is (b)

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Answer 2

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