The purchasing department of a manufacturing firm has decided to apply its costs to jobs using an activity based costing system. Its costs of $490,000 are split among the three major activities:

1. From the information provided, determine the three allocation rates (one for each cost pool) to be used by an activity based costing system.
2. For one job that was produced by the firm, the following purchasing department activities were completed: 200 phone calls were made, 50 purchase orders were issued, and 40 separate incoming orders (receiving reports) were received. What amount of purchasing department cost would be assigned to this job?

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Allocation Measure Total Activity Activity Finding suppliers Issuing purchase order Reviewing receiving report $90,000 Cost Number of telephone calls Number of purchase orders Number of receiving reports 200,000 calls S 300,000 25,000 orders $ 100,000 20,000 reports