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 AWafer B

7.Inserting dies Number of dies 2,200,000 0.7 0.3

8.Purchasing materials Number of purchase orders1,900 0.2 0.8

1.Developing test programsEngineering hours 11,500 0.25 0.75

3.Testing products Test hours 20,000 0.6 0.4

ABC assignments $155,000$155,000

Total overhead cost $310,000

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 $___________

Purchasing cost pool $__________

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 $_____________

Wafer B $_____________

3.What ifthe 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 $___________

Testing products cost pool $____________

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

Wafer A $___________

Wafer B $___________