Bison Creek Company is preparing its annual profit plan. As part of its analysis of the cost of its purchasing activity, management estimates that the $250,000 for purchasing support should be assigned to the individual vendors from the information given as follows: Vendor A Vendor B Vendor C Units purchased 100,000 100,000 500,000 Purchase orders (annual) 12 24 50 Number of shipments received 12 52 100 Required: a. Allocate the purchasing costs to the three vendors, assuming Bison Creek uses units purchased to compute activity-based costs. b. Allocate the purchasing costs to the three vendors, assuming Bison Creek uses purchases orders to compute activity-based costs. c. Allocate the purchasing costs to the three vendors, assuming Bison Creek uses number of shipments to compute activity-based costs.
Bison Creek Company is preparing its annual profit plan. As part of its analysis of the cost of its purchasing activity, management estimates that the $250,000 for purchasing support should be assigned to the individual vendors from the information given as follows:
|
|
Vendor A |
Vendor B |
Vendor C |
|
Units purchased |
100,000 |
100,000 |
500,000 |
|
Purchase orders (annual) |
12 |
24 |
50 |
|
Number of shipments received |
12 |
52 |
100 |
Required:
a. Allocate the purchasing costs to the three vendors, assuming Bison Creek uses units purchased to compute activity-based costs.
b. Allocate the purchasing costs to the three vendors, assuming Bison Creek uses purchases orders to compute activity-based costs.
c. Allocate the purchasing costs to the three vendors, assuming Bison Creek uses number of shipments to compute activity-based costs.
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