Benton Company is preparing its annual profit plan. As part of its analysis of the cost of its purchasing activity, management estimates that the $48,000 for purchasing support should be assigned to the individual vendors from the information given as follows:
$$\begin{array} { | l | r | r | }
\hline & { \text { Vendor A } } &{ \text { Vendor B } } \
\hline \text { Units purchased } & 100,000 & 200,000 \
\hline \text { Purchase orders (annual) } & 6 & 24 \
\hline \text { Number of shipments received } & 12 & 52 \
\hline
\end{array}$$
-
What is the amount of the purchasing costs that should be allocated to Vendor B, assuming Benton uses units purchased to compute activity-based costs?
A) $9,600.
B) $16,000.
C) $32,000.
D) $38,400.

Question

Benton Company is preparing its annual profit plan. As part of its analysis of the cost of its purchasing activity, management estimates that the $48,000 for purchasing support should be assigned to the individual vendors from the information given as follows:
$$\begin{array} { | l | r | r | } 
\hline & { \text { Vendor A } } &{ \text { Vendor B } } \
\hline \text { Units purchased } & 100,000 & 200,000 \
\hline \text { Purchase orders (annual) } & 6 & 24 \
\hline \text { Number of shipments received } & 12 & 52 \
\hline
\end{array}$$
-
What is the amount of the purchasing costs that should be allocated to Vendor B, assuming Benton uses units purchased to compute activity-based costs?
A) $9,600.
B) $16,000.
C) $32,000.
D) $38,400.

Quizplus · Accepted Answer

The purchasing cost is allocated based on the proportion of units purchased. Vendor B purchased 200,000 units out of a total of 300,000 units (100,000 from Vendor A and 200,000 from Vendor B). Therefore, the allocation to Vendor B is $ \frac{200,000}{300,000} \times 48,000 = 32,000 $.

Benton Company Is Preparing Its Annual Profit Plan - What Is the Amount of the Purchasing Costs That

Benton Company Is Preparing Its Annual Profit Plan -
What Is the Amount of the Purchasing Costs That