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 $327,100 Number of purchase orders
Scheduling 241,400 Number of production orders
Materials handling 445,200 Number of moves
Product development 703,500 Number of engineering changes
Production 1,537,100 Machine hours

Number of Purchase Orders Number of Production Orders Number of Moves Number of Engineering Changes Machine Hours Number of Units
Disk drives 4,160 360 1,200 10 1,700 2,000
Tape drives 1,700 125 790 6 9,800 3,500
Wire drives 12,500 810 3,800 20 10,400 2,500

The activity rate for the materials handling cost pool is:_________

a. $188.19 per move
b. $76.22 per move
c. $17.5 per move
d. $65.74 per move

Answer 1

Answer:

Materials handling= $76.89 per move

Explanation:

Giving the following information:

Activity Cost Activity Base

Materials handling 445,200 Number of moves

To calculate the activity rate, we need to use the following formula:

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

Number of Moves:

Disk drives  1,200

Tape drives  790

Wire drives  3,800

Total= 5,790 moves

Materials handling= 445,200 / 5,790

Materials handling= $76.89 per move