Essay
Godfrey Corporation would like to institute an activity-based costing system to price products.The company's Purchasing Department incurs costs of $550,000 per year and has six employees.Purchasing has determined the three major activities that occur during the year.
| Activity | Allocation Measure | # of People | Total Cost |
|---|---|---|---|
| Issuing purchase orders | # of purchase orders | 1 | $150,000 |
| Reviewing receiving reports | # of receiving reports | 2 | $175,000 |
| Making phone calls | # of phone calls | 3 | $225,000 |
During the year,50,000 phone calls were made in the department;15,000 purchase orders were issued;and 10,000 shipments were received.Product A required 200 phone calls,150 receiving reports,and 50 purchase orders.Product B required 350 phone calls,400 receiving reports,and 100 purchase orders.
a. Determine the amount of Purchasing Department cost that should be assigned to each of these products.
b. Determine Purchasing Department cost per unit if 1,500 units of Prochuct and 3,000 units of Product were manufactured during the year.
Correct Answer:
Verified
Correct Answer:
Verified
Q146: Ultimate Vision Corporation<br>Ultimate Vision Corporation has two
Q147: There is a direct relationship between the
Q148: A series of activities that when performed
Q149: Simultaneous engineering can be used to<br>A)reduce both
Q150: Costs that are associated with the production
Q152: For one product that a firm produces,the
Q153: Efficient Electronics Corporation produces two types of
Q154: Business value-added activities add value to a
Q155: For traditional costing purposes,R&D costs are<br>A)capitalized and
Q156: Discuss how activity-based costing and activity based