Adirondack Corporation is estimating activity costs associated with producing two different sized e-reader tablets. The indirect labor can be traced to three separate activity pools. The budgeted activity cost and activity base information, along with the estimated activity-base information, is provided below. ActivityCost Activity Base

Purchasing $250,000 Number of purchase orders

Materials handling $500,000 Number of moves

Production 1,350,000 Machine hours

TOTAL $2,100,000

Number of Purchase Orders; Number of Moves; Machine Hours; Number of Units

7 tablet 3,000 1,500 2,500 2,500

10" tablet 5,000 600 7,500 3,500

TOTALS 8,000 2,100 10,000 6,000

Required: Determine the Activity rate for each activity cost pool. All work must be shown for credit.

Please label your answer as the activity rate for: Purchasing; Materials handling; & Production.

Activity	Activity Cost	Activity Base	Activity Base Total	Activity Cost / Total Activity Base
Purchasing	$250000	Number of Purchase Orders	8000	250000/8000=31.25
Material Handling	$500,000	Number of Moves	2100	500000/2100=238.09
Production	$1350000	Machine Hours	10000	$1350000/10000=135

Using the information from the activity rate you calculated, use the following chart (as a guide- you do not need to replicate the template) to determine the activity cost per tablet:

All work must be shown for credit.

	A	B	C	D	E	F	G
1		7 inch tablet			10 inch tablet
2	Activity	Activity-Base Usage	Activity Rate	Activity = Cost	Activity- Base Usage	Activity Rate	Activity = Cost
3	Purchasing
4
5						]
6
7
8	Activity cost per tablet

Using the information from the activity based costing problem:

If traditional costing had been used and number of machine hours were the allocation base, what would the single allocation rate be? Would applying a single allocation rate be a wise decision to apply costs in this scenario? Why or why not?