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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 as follows: Line Item Description Activity Cost Activity Base Procurement $304,200    Number of purchase orders Scheduling 233,500    Number of production orders Materials handling 459,400    Number of moves Product development 760,500    Number of engineering changes Production 1,500,900    Machine hours Line Item Description Number ofPurchaseOrders Number ofProductionOrders NumberofMoves Number ofEngineeringChanges MachineHours NumberofUnits Disk drives 3,840    400       1,330  13         2,400  2,300  Tape drives 2,300    235       790  7         8,300  4,300  Wire drives 11,700    820       4,500  23         11,700  2,200  The activity rate (rounded to the nearest cent) for the production cost pool is a. $17.05 per machine hour b. $67 per machine hour c. $69.4 per machine hour d. $136.4 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 as follows: Line Item Description Activity Cost Activity Base Procurement $304,200    Number of purchase orders Scheduling 233,500    Number of production orders Materials handling 459,400    Number of moves Product development 760,500    Number of engineering changes Production 1,500,900    Machine hours Line Item Description Number ofPurchaseOrders Number ofProductionOrders NumberofMoves Number ofEngineeringChanges MachineHours NumberofUnits Disk drives 3,840    400       1,330  13         2,400  2,300  Tape drives 2,300    235       790  7         8,300  4,300  Wire drives 11,700    820       4,500  23         11,700  2,200  The activity rate (rounded to the nearest cent) for the production cost pool is a. $17.05 per machine hour b. $67 per machine hour c. $69.4 per machine hour d. $136.4 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 11E: Lonsdale Inc. manufactures entry and dining room lighting fixtures. Five activities are used in...
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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 as follows:

Line Item Description
Activity Cost
Activity Base
Procurement $304,200    Number of purchase orders
Scheduling 233,500    Number of production orders
Materials handling 459,400    Number of moves
Product development 760,500    Number of engineering changes
Production 1,500,900    Machine hours
Line Item Description
Number of
Purchase
Orders
Number of
Production
Orders
Number
of
Moves
Number of
Engineering
Changes

Machine
Hours
Number
of
Units
Disk drives 3,840    400       1,330  13         2,400  2,300 
Tape drives 2,300    235       790  7         8,300  4,300 
Wire drives 11,700    820       4,500  23         11,700  2,200 

The activity rate (rounded to the nearest cent) for the production cost pool is

a. $17.05 per machine hour
b. $67 per machine hour
c. $69.4 per machine hour
d. $136.4 per machine hour
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