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Simplifying the ABC System: Approximately Relevant ABC Systems Patterson Company produces wafers for integrated circuits. Data for the most recent year are provided: Expected Consumption
Simplifying the ABC System: Approximately Relevant ABC Systems Patterson Company produces wafers for integrated circuits. Data for the most recent year are provided: Expected Consumption Ratios Activity Driver Wafer A Wafer B Inserting and sorting process activities: Developing test programs $ Engineering hours Making probe cards Development hours Testing products Test hours Setting up batches Number of batches Engineering design Number of change orders Handling wafer lots Number of moves Inserting dies Number of dies Procurement process activities: Purchasing materials Number of purchase orders Unloading materials Number of receiving orders Inspecting materials Inspection hours Moving materials Distance moved Paying suppliers Number of invoices Total activity cost $ Unitlevel plantwide cost assignmenta $ $ Activity cost assignmentb $ $ a Calculated using number of dies as the single unitlevel driver. b Calculated by multiplying the consumption ratio of each product by the cost of each activity. Required: Using the five most expensive activities, calculate the overhead cost assigned to each product. Assume that the costs of the other activities are assigned in proportion to the cost of the five activities. If required, round your answers to the nearest dollar. Activity Budgeted Activity Cost Testing products $fill in the blank Handling wafer lots $fill in the blank Inserting dies $fill in the blank Purchasing materials $fill in the blank Moving materials $fill in the blank Total activity cost $fill in the blank Approx. ABC Cost Wafer A $fill in the blank Wafer B $fill in the blank Calculate the error relative to the fully specified ABC product cost. Round your calculation to three decimal places and the percentage answer to one decimal place. Relative error Wafer A fill in the blank Wafer B fill in the blank What if activities and each had a cost of $ and the remaining activities had a cost of $ each? Calculate the cost assigned to Wafer A by a fully specified ABC system and then by an approximately relevant ABC approach. Cost by a fully specified ABC system $fill in the blank Cost by an approximately relevant ABC approach $fill in the blank
Simplifying the ABC System: Approximately Relevant ABC Systems
Patterson Company produces wafers for integrated circuits. Data for the most recent year are provided:
Expected Consumption Ratios
Activity Driver Wafer A Wafer B
Inserting and sorting process activities:
Developing test programs $ Engineering hours
Making probe cards Development hours
Testing products Test hours
Setting up batches Number of batches
Engineering design Number of change orders
Handling wafer lots Number of moves
Inserting dies Number of dies
Procurement process activities:
Purchasing materials Number of purchase orders
Unloading materials Number of receiving orders
Inspecting materials Inspection hours
Moving materials Distance moved
Paying suppliers Number of invoices
Total activity cost $
Unitlevel plantwide cost assignmenta $ $
Activity cost assignmentb $ $
a Calculated using number of dies as the single unitlevel driver.
b Calculated by multiplying the consumption ratio of each product by the cost of each activity.
Required:
Using the five most expensive activities, calculate the overhead cost assigned to each product. Assume that the costs of the other activities are assigned in proportion to the cost of the five activities. If required, round your answers to the nearest dollar.
Activity Budgeted Activity Cost
Testing products $fill in the blank
Handling wafer lots $fill in the blank
Inserting dies $fill in the blank
Purchasing materials $fill in the blank
Moving materials $fill in the blank
Total activity cost $fill in the blank
Approx. ABC Cost
Wafer A $fill in the blank
Wafer B $fill in the blank
Calculate the error relative to the fully specified ABC product cost. Round your calculation to three decimal places and the percentage answer to one decimal place.
Relative error
Wafer A fill in the blank
Wafer B fill in the blank
What if activities and each had a cost of $ and the remaining activities had a cost of $ each? Calculate the cost assigned to Wafer A by a fully specified ABC system and then by an approximately relevant ABC approach.
Cost by a fully specified ABC system $fill in the blank
Cost by an approximately relevant ABC approach $fill in the blank
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