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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 five 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  The activity rate for the production cost pool is a.$176.47 per machine hour b.$150.00 per machine hour c.$75.00 per machine hour d.$62.50 per machine hour

Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to five 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  The activity rate for the production cost pool is a.$176.47 per machine hour b.$150.00 per machine hour c.$75.00 per machine hour d.$62.50 per machine hour

Managerial Accounting
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 12E: Activity cost pools, activity rates, and product costs using activity-based costing Caldwell Home...
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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 five 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 

    The activity rate for the production cost pool is

    a.$176.47 per machine hour
    b.$150.00 per machine hour
    c.$75.00 per machine hour
    d.$62.50 per machine hour
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