Chapter 7b Solutions to Cornerstone Exercises

Chapter 7b Solutions to Cornerstone Exercises - La Paz...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
CHAPTER 7B ACTIVITY-BASED COSTING AND MANAGEMENT Cornerstone Exercise 7–33 Cost assignment: Large Retailer Smaller Retailers Ordering $1,000 × 8 $ 8,000 $1,000 × 800 $ 800,000 Sales calls $2,000 × 4 8,000 $2,000 × 196 392,000 Total $ 16,000 $ 1,192,000 Cornerstone Exercise 7–34 Test rate = * 1,000 $600,000 Reorder rate = * * 50 $150,000 = $600 per failed part = $3,000 per reorder *(600 + 390 + 5 + 5). **(30 + 20). Using these rates and the activity data, the total purchasing cost per unit of each component is computed: Alpha Electronics
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: La Paz Company 125X 30Y 125X 30Y Purchase cost: $10 60,000 $ 600,000 $26 30,000 $ 780,000 $12 7,500 $90,000 $28 7,500 $210,000 Testing products: $600 600 360,000 $600 390 234,000 $600 5 3,000 $600 5 3,000 Reordering components: $3,000 30 90,000 $3,000 20 60,000 $3,000 0 $3,000 0 Total $ 1,050,000 $ 1,074,000 $93,000 $213,000 Units 60,000 30,000 7,500 7,500 Unit cost $ 17.50 $ 35.80 $ 12.40 $ 28.40...
View Full Document

Ask a homework question - tutors are online