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.
Activity Cost Activity Base
Procurement $377,300 Number of purchase orders
Scheduling 220,400 Number of production orders
Materials handling 417,500 Number of moves
Product development 779,200 Number of engineering changes
Production 1,499,100 Machine hours
Number of Number of Number of Number of Machine Number of
Purchase Production Moves Engineering Hours Units
Orders Orders Changes
Disk drives 4,030 260 1,330 10 2,000 1,500
Tape drives 1,600 185 780 8 8,800 3,600
Wire drives 11,800 780 3,600 21 11,400 2,100
The activity rate for the materials handling cost pool is:______.
a. $179.92 per move.
b. $73.12 per move.
c. $67.53 per move.
d. $21.65 per move.

Answer 1

Answer:

Materials handling= $73.12 per move

Explanation:

Giving the following information:

Activity Cost Activity Base

Materials handling 417,500 Number of moves

Number of moves:

Disk drives 1,330

Tape drives 780

Wire drives 3,600

Total= 5,710

To calculate the predetermined manufacturing overhead rate we need to use the following formula:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Materials handling= 417,500 / 5,710

Materials handling= $73.12 per move