Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please show work in Excel :) Delano Incorporated would like to institute an activity-based costing system to price products. The company's Purchasing Department incurs costs

image text in transcribed

Please show work in Excel :)

Delano Incorporated would like to institute an activity-based costing system to price products. The company's Purchasing Department incurs costs of $620,000 per year and has 10 employees. Purchasing has determined the three major activities that occur during the year. During the year. 50,000 phone calls were made in the purchasing 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 (There were other products produced not mentioned here in this problem.) a. Calculate the allocation rates for: Issuing purchase orders: Cost per purchase order = ? Reviewing receiving reports: Cost per receiving report = ? Making phone calls Cost per phone call = ? b. Using ABC costing with the allocation rates calculated in part a), determine the amount of Purchasing Department cost that should be assigned to Product A and to Product B. c. Determine cost per unit if 890 units of Product A and 500 units of Product B were manufactured during the year

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost Accounting A Managerial Emphasis

Authors: Charles T. Horngren, Srikant M.Dater, George Foster, Madhav

14th Edition

978-0132960649, 132960648, 132109174, 978-0132109178

More Books

Students also viewed these Accounting questions