Reference no: EM132559475

The components of the Material-Handling Department budget for 20XX are as follows:

Payroll - $300,000
Employee Benefits - $50,000
Telephone - $60,000
Materials and supplies - $10,000
Depreciation - $9,000
Direct-material budget:
Government - $3,000,000
Non-Government - $1,200,000

You have determined that purchase orders are the appropriate cost driver for allocating material handling costs. The estimated number of purchase orders to be processed in 20XX is as follows:

Government Contracts - 100,000
Non-Government Contracts - 225,000
Accounting - 2,000
Marketing - 1,500
Maintenance - 3,500
Total - 332,000
Instructions

calculate the following:

Question 1: Calculate the material handling rate that would have been used based on the traditional allocation.

Question 2: Calculate the material handling rate to be allocated on a per purchase order basis.

Question 3: Calculate the material handling costs assigned to government contracts based on the traditional method.

Question 4: Calculate the material handling costs assigned to government contracts based on the ABC method.