Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. 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 Cost Activity Base Procurement $369,100 Number of purchase orders Scheduling 209,600 Number of production orders Materials handling 494,900 Number of moves Product development 742,800 Number of engineering changes Production 1,503,700 Machine hours Number of Purchase Orders Number of Production Orders Number of Moves Number of Engineering Changes Machine Hours Number of Units Disk drives 3,910 300 1,260 11 1,600 2,300 Tape drives 2,300 195 790 8 8,600 4,000 Wire drives 12,000 870 3,800 24 12,000 2,600 The activity-based cost for each tape drive unit is a.$20.27 b.$740.63 c.$230.56 d.$216.02

This is the type of costing system that has to do with the assigning of the direct costs as well as the indirect costs to certain products as well as services.

To get this we would have to use the formula

Cost per Unit = Activity Cost / Total of Activity Base

= 494900 / 2300

= .$216.02

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