Creed Jones has just finished a project where he identified and assigned costs to the ac¬

tivities in the Receiving Department. The following is a list of these activities and their costs:

The goods purchased are two different types of electronic components used in producing the company's two products (a regular and a luxury model of a color printer), and a lubri¬
cating oil used for production equipment.
Creed has decided to assign the costs of the receiving activities to the materials and supplies purchased. To do so, he has collected the following data (bill of activities for materials):

Machine hours are used to assign the cost of the machining activity to the two products.
Required:
1. Assign the cost of the receiving activities to the deluxe and regular printers using ma¬
terials as an intermediate cost object. What are the advantages of this approach?
2. One of Creed's cost accountants argued that assigning the cost of the receiving activ¬
ities to materials was more bother than it was worth. She suggested that the number of components purchased be used to assign receiving costs (costs of all receiving ac¬
tivities) to the two products. Make this assignment and comment on the merits of the suggestion.

Transcribed Image Text:

Unloading goods Verifying and counting goods Inspecting goods Moving goods $ 32,000 64,000 153,000 66,000