Patterson Company produces wafers for integrated circuits. Data for the most recent year are provided: Expected Consumption Ratios Activity Driver Wafer B Wafer A Inserting and sorting process activities: Developing test programs 47,000 0.25 1. 2$ Engineering hours 0.75 Making probe cards Development hours 2. 68,000 0.10 0.90 Test hours 0.60 3. Testing products 700,000 0.40 Number of batches Setting up batches 0.55 4. 145,000 0.45 Engineering design Number of change orders 0.20 0.80 5. 93,000 Handling wafer lots Number of moves 500,000 6. 0.40 0.60 7. 0.30 Inserting dies 1,100,000 Number of dies 0.70 Procurement process activities: Purchasing materials Number of purchase orders 600,000 0.20 0.80 8. Unloading materials Number of receiving orders 0.35 0.65 9. 61,000 10. Inspecting materials 79,000 Inspection hours 0.60 0.40 Distance moved 0.50 0.50 11. Moving materials 400,000 12. Number of invoices 0.35 0.65 Paying suppliers 35,000 $ 3,828,000 Total activity cost Unit-level (plantwide) cost assignment? $2,679,600 $1,148,400 Activity cost assignmentb $1,907,900 $1,920,100 3. What if activities 1, 2, 5, and 8 each had a cost of $808,000 and the remaining activities had a cost of $74,500 each? Calculate the cost assigned to Wafer A by a fully specified ABC system and then by an approximately relevant ABC approach. Cost by a fully specified ABC system Cost by an approximately relevant ABC approach
Patterson Company produces wafers for integrated circuits. Data for the most recent year are provided: Expected Consumption Ratios Activity Driver Wafer B Wafer A Inserting and sorting process activities: Developing test programs 47,000 0.25 1. 2$ Engineering hours 0.75 Making probe cards Development hours 2. 68,000 0.10 0.90 Test hours 0.60 3. Testing products 700,000 0.40 Number of batches Setting up batches 0.55 4. 145,000 0.45 Engineering design Number of change orders 0.20 0.80 5. 93,000 Handling wafer lots Number of moves 500,000 6. 0.40 0.60 7. 0.30 Inserting dies 1,100,000 Number of dies 0.70 Procurement process activities: Purchasing materials Number of purchase orders 600,000 0.20 0.80 8. Unloading materials Number of receiving orders 0.35 0.65 9. 61,000 10. Inspecting materials 79,000 Inspection hours 0.60 0.40 Distance moved 0.50 0.50 11. Moving materials 400,000 12. Number of invoices 0.35 0.65 Paying suppliers 35,000 $ 3,828,000 Total activity cost Unit-level (plantwide) cost assignment? $2,679,600 $1,148,400 Activity cost assignmentb $1,907,900 $1,920,100 3. What if activities 1, 2, 5, and 8 each had a cost of $808,000 and the remaining activities had a cost of $74,500 each? Calculate the cost assigned to Wafer A by a fully specified ABC system and then by an approximately relevant ABC approach. Cost by a fully specified ABC system Cost by an approximately relevant ABC approach
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Patterson Company produces wafers for integrated circuits. Data for the most recent year are provided:
Expected Consumption Ratios
Activity
Driver
Wafer B
Wafer A
Inserting and sorting process activities:
Developing test programs
47,000
0.25
1.
2$
Engineering hours
0.75
Making probe cards
Development hours
2.
68,000
0.10
0.90
Test hours
0.60
3.
Testing products
700,000
0.40
Number of batches
Setting up batches
0.55
4.
145,000
0.45
Engineering design
Number of change orders
0.20
0.80
5.
93,000
Handling wafer lots
Number of moves
500,000
6.
0.40
0.60
7.
0.30
Inserting dies
1,100,000
Number of dies
0.70
Procurement process activities:
Purchasing materials
Number of purchase orders
600,000
0.20
0.80
8.
Unloading materials
Number of receiving orders
0.35
0.65
9.
61,000
10.
Inspecting materials
79,000
Inspection hours
0.60
0.40
Distance moved
0.50
0.50
11.
Moving materials
400,000
12.
Number of invoices
0.35
0.65
Paying suppliers
35,000
$ 3,828,000
Total activity cost
Unit-level (plantwide) cost assignment?
$2,679,600
$1,148,400
Activity cost assignmentb
$1,907,900
$1,920,100
Transcribed Image Text:3. What if activities 1, 2, 5, and 8 each had a cost of $808,000 and the remaining activities had a cost of $74,500 each? Calculate the cost assigned to Wafer A by a fully specified
ABC system and then by an approximately relevant ABC approach.
Cost by a fully specified ABC system
Cost by an approximately relevant ABC approach
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