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 $320,600 Number of purchase orders Scheduling 246,400 Number of production orders Materials handling 449,100 Number of moves Product development 747,300 Number of engineering changes Production 1,561,700 Machine hours Number of Purchase Orders Number of Production Orders Number of Moves Number of Engineering Changes Machine Hours Number of Units Disk drives 3,830 430 1,360 14 2,500 1,500 Tape drives 2,500 155 580 6 8,500 4,100 Wire drives 11,600 940 4,400 25 10,300 2,200 The activity rate for the production cost pool is
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 $320,600 Number of purchase orders Scheduling 246,400 Number of production orders Materials handling 449,100 Number of moves Product development 747,300 Number of engineering changes Production 1,561,700 Machine hours Number of Purchase Orders Number of Production Orders Number of Moves Number of Engineering Changes Machine Hours Number of Units Disk drives 3,830 430 1,360 14 2,500 1,500 Tape drives 2,500 155 580 6 8,500 4,100 Wire drives 11,600 940 4,400 25 10,300 2,200 The activity rate for the production cost pool is
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 11E: Lonsdale Inc. manufactures entry and dining room lighting fixtures. Five activities are used in...
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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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 Base |
||
| Procurement | $320,600 | Number of purchase orders | |
| Scheduling | 246,400 | Number of production orders | |
| Materials handling | 449,100 | Number of moves | |
| Product development | 747,300 | Number of engineering changes | |
| Production | 1,561,700 | Machine hours |
Number of Purchase Orders |
Number of Production Orders |
Number of Moves |
Number of Engineering Changes |
Machine Hours |
Number of Units |
|
| Disk drives | 3,830 | 430 | 1,360 | 14 | 2,500 | 1,500 |
| Tape drives | 2,500 | 155 | 580 | 6 | 8,500 | 4,100 |
| Wire drives | 11,600 | 940 | 4,400 | 25 | 10,300 | 2,200 |
The activity rate for the production cost pool is
Transcribed Image Text: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.
Procurement
Scheduling
Materials handling
Product development
Production
Disk drives
Tape drives
Wire drives
Activity Cost
Activity Base
$320,600
Number of purchase orders
246,400 Number of production orders
449,100 Number of moves
747,300 Number of engineering changes
1,561,700 Machine hours
Number of
Purchase
Orders
3,830
2,500
11,600
Number of
Production
Orders
430
155
940
The activity rate for the production cost pool is
Oa. $70.84 per machine hour
Ob. $144.16 per machine hour
Oc. $17.88 per machine hour
Od. $73.32 per machine hour
Number
of
Moves
1,360
580
4,400
Number of
Engineering
Changes
14
6
25
Machine
Hours
2,500
8,500
10,300
Number
of
Units
1,500
4,100
2,200
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