GHI Company would like to institute an activity-based costing system to price products. The company's Purchasing...

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GHI Company would like to institute an activity-based costing system to price products. The company's Purchasing Department incurs costs of $550,000 per year and has six employees. Purchasing has determined the three major activities that occur during the year. Activity Total Cost Allocation Measure No. of People Issuing purchase orders $150,000 # of purchase orders Reviewing receiving reports $175,000 Making phone calls $225,000 1 # of receiving reports 2 # of phone calls 3 During the year, 50,000 phone calls were made in the department; 15,000 purchase orders were issued; and 10,000 shipments were received. Product A required 200 phone calls, 150 receiving reports, and 50 purchase orders. Product B required 350 phone calls, 400 receiving reports, and 100 purchase orders. GHI Company would like to institute an activity-based costing system to price products. The company's Purchasing Department incurs costs of $550,000 per year and has six employees. Purchasing has determined the three major activities that occur during the year. Activity Total Cost Allocation Measure No. of People Issuing purchase orders $150,000 # of purchase orders Reviewing receiving reports $175,000 Making phone calls $225,000 1 # of receiving reports 2 # of phone calls 3 During the year, 50,000 phone calls were made in the department; 15,000 purchase orders were issued; and 10,000 shipments were received. Product A required 200 phone calls, 150 receiving reports, and 50 purchase orders. Product B required 350 phone calls, 400 receiving reports, and 100 purchase orders.