FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Dorothy and her colleague Margaret are having a debate about the nature of their merchandising company's purchasing department
costs. Dorothy believes the purchasing department costs should be considered batch-level costs and allocated to product lines based
on the number of purchase orders used in each area. Margaret believes the costs should be considered unit-level costs because the
volume of units needed drives the amount of purchasing. Data for both cost drivers, along with total purchasing department costs for
the company, is as follows.
Purchasing department costs
Budgeted number of purchase orders
Budgeted number of units
Purchasing cost allocated $
eTextbook and Media
$4,021,500
The first product line requires 50 purchase orders this year in order to purchase 28,000 units. How much purchasing cost would be
allocated to this line under the (a) batch-level assumption and (b) unit-level assumption?
Save for Later
38,300
26,810,000
(a) Batch-level
$
(b) Unit-level
Attempts: 0 of 4 used
Submit Answer
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Transcribed Image Text:Current Attempt in Progress Dorothy and her colleague Margaret are having a debate about the nature of their merchandising company's purchasing department costs. Dorothy believes the purchasing department costs should be considered batch-level costs and allocated to product lines based on the number of purchase orders used in each area. Margaret believes the costs should be considered unit-level costs because the volume of units needed drives the amount of purchasing. Data for both cost drivers, along with total purchasing department costs for the company, is as follows. Purchasing department costs Budgeted number of purchase orders Budgeted number of units Purchasing cost allocated $ eTextbook and Media $4,021,500 The first product line requires 50 purchase orders this year in order to purchase 28,000 units. How much purchasing cost would be allocated to this line under the (a) batch-level assumption and (b) unit-level assumption? Save for Later 38,300 26,810,000 (a) Batch-level $ (b) Unit-level Attempts: 0 of 4 used Submit Answer
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