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 procurement per purchase order.
A) $43.53
B) $18.50
C) $15.42
D) $37.00

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 procurement per purchase order.
A) $43.53 
B) $18.50 
C) $15.42 
D) $37.00

Quizplus · Accepted Answer

To determine the activity rate for procurement per purchase order, we need to divide the budgeted activity cost for procurement ($925,000) by the total activity base for procurement (50,000 purchase orders), which gives us an activity rate of $18.50 per purchase order ($925,000/50,000). Therefore, the best choice is B.

Panamint Systems Corporation Is Estimating Activity Costs Associated with Producing