eBook
Question Content Area
Simplifying the ABC System: Equally Accurate Reduced ABC Systems

Selected activities and other information are provided for Patterson Company for its most recent year of operations.

Expected Consumption
Ratios
Activity Driver Quantity Wafer A Wafer B
7. Inserting dies Number of dies 2,000,000 0.7 0.3
8. Purchasing materials Number of purchase
orders 2,700 0.2 0.8
1. Developing test programs Engineering hours 8,000 0.25 0.75
3. Testing products Test hours 17,000 0.6 0.4
ABC assignments $150,000 $150,000
Total overhead cost $300,000
Required:

1. Form reduced system cost pools for activities 7 and 8. Do not round interim calculations. Round your final answers to the nearest dollar.

Inserting dies cost pool $fill in the blank 1

Purchasing cost pool $fill in the blank 2

2. Assign the costs of the reduced system cost pools to Wafer A and Wafer B. Do not round interim calculations. Round your final answers to the nearest dollar.

Wafer A $fill in the blank 3

Wafer B $fill in the blank 4

3. What if the two activities were 1 and 3? Repeat Requirements 1 and 2.

Form reduced system cost pools for activities 1 and 3.

Do not round interim calculations. Round your final answers to the nearest dollar.

Developing test programs cost pool $fill in the blank 5

Testing products cost pool $fill in the blank 6

Assign the costs of the reduced system cost pools to Wafer A and Wafer B.

Wafer A $fill in the blank 7

Wafer B $fill in the blank 8