Question

Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire...

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.


Activity Cost

Activity Base
Procurement $345,000 Number of purchase orders
Scheduling 249,700 Number of production orders
Materials handling 400,600 Number of moves
Product development 755,800 Number of engineering changes
Production 1,420,000 Machine hours

Number of
Purchase
Orders

Number of
Production
Orders

Number
of
Moves

Number of
Engineering
Changes


Machine
Hours

Number
of
Units
Disk drives 4,140    430       1,420 14         2,500 2,200
Tape drives 1,600    165       780 7         9,100 4,200
Wire drives 11,000    970       4,100 24         12,000 2,800

The activity-based cost for each tape drive unit is

a.$184.29

b.$286.27

c.$631.19

d.$20.61

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