Chapter 7b Solutions to Cornerstone Exercises

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

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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
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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...
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