Simplifying the ABC System: Equally Accurate Reduced ABC Systems
Selected activities and other information are provided for Patterson Company for its most recent year of operations.
Expected Consumption
Ratios
Activity
Driver
Quantity
Wafer A
Wafer B
7. Inserting dies
Number of dies
2,100,000
0.7
0.3
8. Purchasing materials
Number of purchase
orders
2,400
0.2
0.8
1. Developing test programs
Engineering hours
11,500
0.25
0.75
3. Testing products
Test hours
15,500
0.6
0.4
ABC assignments
$150,000
$150,000
Total overhead cost
$300,000
Required:
1. Form reduced system cost pools for activities 7 and 8. Do not round interim calculations. Round your final answers to the nearest dollar.
Inserting dies cost pool
Purchasing cost pool
2. Assign the costs of the reduced system cost pools to Wafer A and Wafer B. Do not round interim calculations. Round your final answers to the nearest dollar.
Wafer A
Wafer B
3. What if the two activities were 1 and 3? Repeat Requirements 1 and 2.
Form reduced system cost pools for activities 1 and 3.
Do not round interim calculations. Round your final answers to the nearest dollar.
Developing test programs cost pool
Testing products cost pool
Assign the costs of the reduced system cost pools to Wafer A and Wafer B.
Wafer A
Wafer B
