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Lee Corporation is estimating activity costs associated with producing pants, shorts and slacks. The indirect labor can be traced to four separate activity pools. The
Lee Corporation is estimating activity costs associated with producing pants, shorts and slacks. The indirect labor can be traced to four separate activity pools. The budgeted activity cost and activity base data by product are provided below: Activity Procurement Scheduling Materials handling Product development Production Cost P 8,880,000 6,000,000 12,000,000 17,520,000 36,000,000 Activity Base Number of purchase orders Number of production orders Number of moves Number of engineering changes Machine hours No. of Purchase Orders No. of Production Orders No. of Moves No. of Engineerin g Changes Machine Hours Number of units Pants 7,200 240 96,000 96,000 288,000 Shorts 48,000 192,000 33,600 19,200 96,000 3,600 19,200 240 48,000 72,000 16,000 Slacks 600 240,000 Required: 1. Determine the activity rate for procurement per purchase order. 2. Determine the activity rate per production order for scheduling. 3. Determine the activity rate of materials handling per move. 4. Determine the activity rate of product development per change. 5. Determine the activity rate of production per machine hour. 6. Determine the activity base cost for each pants, shorts and slacks unit
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