Panamint Systems Corporation Is Estimating Activity Costs Associated with Producing

question 61

Multiple Choice

Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to five separate activity pools. The budgeted activity cost and activity base data by product are provided below. ​
-Activity rates are determined by

• A)dividing the actual cost for each activity pool by the actual activity base for that pool
• B)dividing the cost budgeted for each activity pool by the estimated activity base for that pool
• C)dividing the actual cost for each activity pool by the estimated activity base for that pool
• D)dividing the cost budgeted for each activity pool by the actual activity base for that pool

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Definitions:

Materials Price Variance

The difference between the actual cost of materials and the expected (standard) cost.

Raw Material

The basic material from which a product is made, used in the initial stages of production.

Materials Price Variance

The difference between the actual cost of materials and the standard cost multiplied by the quantities purchased.

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the expected quantity, based on the standard cost.