Riobamba Manufacturing produces specially machined parts. The parts are produced in batches in one continuous manufacturing process.
Question:
Riobamba Manufacturing produces specially machined parts. The parts are produced in batches in one continuous manufacturing process. Each part is custom produced and re¬
quires special engineering design activity (based on customer specifications). Once the de¬
sign is completed, then the equipment can be set up for batch production. Once the batch is completed, a sample is taken and inspected to see if the parts are within the tolerances allowed. Thus, the manufacturing process has four activities: engineering, setups, machin¬
ing, and inspecting. In addition, there is a sustaining process with two activities: providing utilities (plantwide) and providing space.' Costs have been assigned to each activity using direct tracing and resource drivers:
Activity drivers for each activity have been identified and their practical capacities listed:
The costs of facility-level activities are assigned using machine hours.
Required:
1. Identify the activities within each process as unit-level, batch-level, product-level, or facility-level.
2. Create homogeneous cost pools. Identify the activities that belong to each pool and the activity driver that will be used for computing pool rates.
3. Identify the activity driver for each pool and compute the pool rate.
Step by Step Answer:
Cost Management Accounting And Control
ISBN: 9780324002324
3rd Edition
Authors: Don R. Hansen, Maryanne M. Mowen