(solution) Panamint Systems Corporation is estimating activity costs

(solution) Panamint Systems Corporation is estimating activity costs

 

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

$  370,000 

Number of purchase orders
Scheduling

  250,000

Number of production orders
Materials handling

  500,000

Number of moves
Product development

  730,000

Number of engineering changes
Production

1,500,000

Machine hours
 
 

Number of
Purchase
Orders

Number

of

Production

Orders

Number
of
Moves

Number of Engineering
Changes

Machine
Hours

Number
of
Units

Disk drives

4,000

300

1,400

10

 2,000

2,000

Tape drives

4,000

150

  800

 10

 8,000

4,000

Wire drives

12,000 

800

4,000

25

10,000

2,500

Determine the activity rate for materials handling per move.

a. $58.82
b. $50.00
c. $80.65
d. $20.83

Materials handling cost
Materials handling total activity
Cost per move 500,000
6200
80.64516