Question
Simplifying the ABC System: Approximately Relevant ABC Systems Patterson Company produces wafers for integrated circuits. Data for the most recent year are provided: Activity
Simplifying the ABC System: Approximately Relevant ABC Systems Patterson Company produces wafers for integrated circuits. Data for the most recent year are provided: Activity Inserting and sorting process activities: Driver Expected Consumption Ratios Wafer A Wafer B 1. Developing test programs $ 50,000 Engineering hours 0.25 0.75 2. Making probe cards 60,000 Development hours 0.10 0.90 3. Testing products 600,000 Test hours 0.60 0.40 4. Setting up batches 135,000 Number of batches 0.55 0.45 5. Engineering design 90,000 Number of change orders 0.15 0.85 6. Handling wafer lots 300,000 Number of moves 0.45 0.55 7. Inserting dies 700,000 Number of dies 0.70 0.30 Procurement process activities: 8. Purchasing materials 400,000 Number of purchase orders 0.20 0.80 9. Unloading materials 60,000 Number of receiving orders 0.35 0.65 10. Inspecting materials 75,000 Inspection hours 0.65 0.35 11. Moving materials 500,000 Distance moved 0.50 0.50 12. Paying suppliers 30,000 Number of invoices 0.30 0.70 Total activity cost $ 3,000,000 Unit-level (plantwide) cost assignment Activity cost assignmentb $2,100,000 $900,000 $1,500,000 $1,500,000 aCalculated using number of dies as the single unit-level driver. bCalculated by multiplying the consumption ratio of each product by the cost of each activity.
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