what amount of purchasing department cost should be assigned to this product 641313

(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.

Activity Don't use plagiarized sources. Get Your Custom Essay on what amount of purchasing department cost should be assigned to this product 641313 Get an essay WRITTEN FOR YOU, Plagiarism free, and by an EXPERT! Order Essay	Allocation Measure	Quantity	Total Cost
Find best suppliers	Number of telephone calls	375,000	$375,000
Issue purchase orders	Number of purchase orders	46,875	187,500
Review receiving reports	Number of receiving reports	28,125	168,750

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?

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