Rainier Company Has a Purchasing Department That Provides Services to Two

question 99

Essay

Rainier Company has a purchasing department that provides services to two factories located in Carbondale and the other in Peoria.Budgeted costs for the purchasing department consist of $55,000 per year of fixed costs and $8 per purchase order for variable costs.The level of budgeted fixed costs is determined by the peak-period requirements.The Carbondale factory requires 40% of the peak-period capacity and the Peoria factory requires 60%.During the coming year,1,800 purchase orders were processed for the Carbondale factory and 2,700 purchase orders for the Peoria factory.Required:
Compute the amount of purchasing department cost that should be charged to each factory for the year.

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