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3. (20 points) Tric (20 points) TriCo would like to institute an activity-based costing system to price produc determine how to allocate Purchasing Department costs

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3. (20 points) Tric (20 points) TriCo would like to institute an activity-based costing system to price produc determine how to allocate Purchasing Department costs under an ABC system. The company Purchasing Department (which only buys manufacturing supplies and materials) incurs costs year and has six employees each working 40 hours per week. Purchasing has determined them activities that occur in the department during the year are as follows. S system to price products. Your job is materials) incurs costs of $96,000 per Activity Cost Driver 7,500 # of purchase orders Number of People Doing this activity Total cost Issuing purchase Orders 2 $15,000 Reviewing receiving reports for materials purchases & DOO # of shipments received 96.000 $70,000 Contacting suppliers # of phone calls $11,000 During the year, 1,500 purchase orders were issued by the purchasing department, 2,000 shipments of materials were received and 500 phone calls were made to suppliers. Product A required 20 purchase orders, 30 receiving reports and 11 phone calls to suppliers. Product A also required 75 direct labor hours in the manufacturing process. Determine the amount of purchasing department cost that should be assigned to Product A. 6emp 40 Lovers sestol ty6,000

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