Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to five separate activity pools. The
budgeted activity cost and activity base data by product are as follows:
Activity Cost
Activity Base
Procurement
$370,000 Number of purchase orders
Scheduling
250,000 Number of production orders
Materials handling
500,000 Number of moves
Product development
730,000 Number of engineering changes
Production
1,500,000 Machine hours
Number of Number of Number
of
Purchase
Production
Moves
Engineering
Machine
Units
Orders
Orders
Changes
Hours
Disk drives
4,000
300
1,400
10
2,000
2,000
Tape drives
4,000
150
800
10
8,000
4,000
Wire drives
12,000
800
4,000
25
10,000
2,500
The activity rate (rounded to the nearest cent) for the production cost pool is
a. $150.00 per machine hour
b. $75.00 per machine hour
c. $62.50 per machine hour
d. $176.47 per machine hour
