The following items are associated with a functional-based cost accounting infonnation system, an activity-based cost accounting information system, or both (that is, some elements are com¬

mon to the two systems).

a. Usage of direct materials

b. Direct materials cost assigned to products using direct tracing

c. Direct labor cost incurrence

d. Direct labor cost assigned to products using direct tracing

e. Setup cost incurrence

f. Setup cost assigned using number of setups as the activity driver g. Setup cost assigned using direct labor hours as the activity driver h. Cost accounting personnel i. Submission of a bid using product cost plus 25 percent j. Purchasing cost incurrence k. Purchasing cost assigned to products using direct labor hours as the activity driver l. Purchasing cost assigned to products using number of orders as the activity driver m. Material handling cost incurrence n. Material handling cost assigned using the number of moves as the activity driver o. Material handling cost assigned using direct labor hours as the activity driver p. Computer q. Costing out of products r. Decision to continue making a part rather than buying it s. Printer t. Customer service costs incurred u. Customer service costs assigned to products using number of complaints as the activity driver V. Report detailing individual product costs w. Commission costs X. Commission costs assigned to products using units sold as the activity driver y. Plant depreciation z. Plant depreciation assigned to products using direct labor hours Required:
1. For each cost system, classify the items into one of the following categories:

a. Interrelated parts

b. Processes

c. Objectives

d. Inputs

e. Outputs

f. User actions Explain the choices that differ between the two systems. Which system will provide the best support for the user actions? Explain.
2. Draw an operational model diagram that illustrates each cost accounting system—
with the items that belong to the system used as examples for each component of the model.
3. Based on the operational models, comment on the relative costs and benefits of the two systems. Which system should be chosen?