What amount of purchasing department cost should be assigned to this product? 1 answer below »
(ABC) Bernacke Corp. is instituting an activity-based costing project in its 10-personpurchasing department. Annual departmental overhead costs are $731,250. Because finding the best supplier takes the majority of effort in the department, most of the costs are allocated to this activity area. Many purchase orders are received in a single shipment.
Find best suppliers
Number of telephone calls
Issue purchase orders
Number of purchase orders
Review receiving reports
Number of receiving reports
One special-order product manufactured by the company required the following purchasing department activities: 225 telephone calls, 50 purchase orders, and 25receipts.
a. What amount of purchasing department cost should be assigned to this product?
b. If 100 units of the product are manufactured during the year, what is the purchasing department cost per unit?
c. If purchasing department costs had been allocated using telephone calls as the allocation base, how much cost would have been assigned to this product?