Potter Manufacturing has the following group- ings of activities and primary stage cost drivers: Activity (Cost Center)

Potter Manufacturing has the following group- ings of activities and primary stage cost drivers:

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Activity (Cost Center) Grouping Purchasing Production-Labor-Paced Assembly Production-Machine-Paced Assembly Production-Quality Testing Marketing and Distribution Primary Stage Cost Driver Number of parts Direct labor hours Machine hours Testing hours Number of finished units sold The costs that have been identified either directly or indirectly with "Production-Labor-Paced Assembly" are as follows: (a) Production manager's salary and office expenses. (An analysis of production manager's time shows that he/she spends 70 percent on labor-paced assembly, 20 percent on machine-paced assembly, and 10 percent on quality testing.) (b) Supervisor's salary. Yo (c) Supplies and other indirect materials costs. (d) Repair and maintenance costs. (This work is performed by a separate support function called "Maintenance.") (e) Fringe benefit costs of all workers in the labor-paced assembly activity. (f) Heat, light, and power costs. (g) Depreciation on equipment. (h) Janitorial costs. (This work is performed by a separate janitorial support function.) (i) Plant security. (j) Plant insurance. Required: Explain how preliminary cost drivers are used to trace each of the costs to Produc- tion-Labor-Paced Assembly activity grouping. Include in your discussion a suggested cost driver for each cost.