OBJECTIVE CORNERSTONE 4.10 Cornerstone Exercise 4.10 Simplifying the ABC System: Equally Accurate Reduced ABC Systems Selected activities and other information are provided for Patterson Company for its most recen year of operations. Expected Consumption Ratios Wafer B Activity 7. Inserting dies 8. Purchasing materials Driver Number of dies Number of purchase orders Engineering hours Test hours Quantity 2,000,000 2,500 Wafer A 0.70 0.20 0.30 0.80 1. Developing test programs 3. Testing products ABC assignment Total overhead cost 10,000 20,000 0.25 0.60 $1,500,000 0.75 0.40 $1,500,000 $3,000,000 OBJECTIVE CORNERSTONE 4.10 Cornerstone Exercise 4.10 Simplifying the ABC System: Equally Accurate Reduced Cornerstone Exercis 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 0.70 0.30 8. Purchasing materials Number of purchase 2.500 0.20 0.80 orders 1. Developing test programs Engineering hours 10,000 0.25 0.75 3. Testing products 20,000 0.60 0.40 ABC assignment $1,500,000 $1,500,000 Total overhead cost $3,000,000 Required: 1. Form reduced system cost pools for activities 7 and 8. 2. Assign the costs of the reduced system cost pools to Wafer A and Wafer B. 3. What if the two activities were 1 and 3? Repeat Requirements 1 and 2. What does this imply Test hours