question archive Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives
Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives
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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 BaseProcurement$357,700 Number of purchase ordersScheduling236,800 Number of production ordersMaterials handling458,700 Number of movesProduct development783,700 Number of engineering changesProduction1,400,700 Machine hours
Number of
Purchase
Orders
Number of
Production
Orders
Number
of
Moves
Number of
Engineering
Changes
Machine
Hours
Number
of
UnitsDisk drives3,840 360 1,290 13 1,700 1,500 Tape drives1,900 145 610 7 9,200 4,400 Wire drives11,100 730 3,800 22 11,900 2,400
The activity rate for the production cost pool is
a.$141.9 per machine hour
b.$61.43 per machine hour
c.$80.47 per machine hour
d.$21.24 per machine hour
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The activity rate for the production cost pool is $61.43 per machine hour
Step-by-step explanation
The activity rate for the production cost pool
Activity rate=Activity cost/Activity Base
Activity cost -Production=$1,400,700
Activity Base=Machine hours
Machine hours=1,700 + 9,200 + 11,900
Machine hours=12,800 machine hours
Activity rate=$1,400,700/22,800
Activity rate=$61.43 per machine hour
