Panamint Systems Corporation is estimating activity costs associated with produc
ID: 2454055 • Letter: P
Question
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.
Determine the activity rate for product development per change. Round to the nearest cent.
Select the correct answer.
Activity Cost
Activity Base Procurement $320,698 Number of purchase orders Scheduling $221,392 Number of production orders Materials handling $466,451 Number of moves Product development $754,105 Number of engineering changes Production $1,575,766 Machine hours
Number of
Purchase
Orders Number
of
Production
Orders
Number
of
Moves
Number of Engineering
Changes
Machine
Hours
Number
of
Units Disk drives 3,825 334 1,320 12 2,316 1,919 Tape drives 1,560 170 702 5 8,153 4,376 Wire drives 12,396 948 3,515 23 11,789 2,719
Explanation / Answer
Total Cost of Product Development = $754,105
Total Number of Engineering Change = 40
Activity Rate for Product development per change = 754,105 / 40 = $18,852.63
So, the correct answer is d. $18,852.63
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