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Question: panamint systems corporation is estimating activity costs associated with producing...

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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 $352,000 Number of purchase orders
Scheduling $213,200 Number of production orders
Materials handling $454,500 Number of moves
Product development $725,300 Number of engineering changes
Production $1,401,500 Machine hours

Number of
Purchase
Orders

Number of
Production
Orders

Number
of
Moves

Number of
Engineering
Changes


Machine
Hours

Number
of
Units
Disk drives 3,800 310 1,500 11 2,100 2,200
Tape drives 1,700 215 580 6 8,300 3,900
Wire drives 12,600 960 3,700 29 11,600 3,000

Determine the activity rate for product development per change.

a. $33,112

b. $70,953

c. $7,884

d. $15,767

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