E8.25 LO 8.5 Activity costs and activity drivers: manufacturer Cacophony Ltd manufactures mobile phones in its Auckland plant. The following costs are budgeted for March.

Raw materials and components Insurance, plant Electricity, machinery Electricity, light Engineering design Depreciation, plant Depreciation, machinery Security wages, plant Equipment maintenance, wages Equipment maintenance, parts Setup wages Inspection of finished goods Property taxes Natural gas, heating Required

$2 21 2 500 1 000000 360000 120000 1 200000 1 050000 2 100000 60000 225 000 70000 120000 60000 240000 45 000 1. Assign the costs to the materials-related, machinery-related, setup, inspection, engineering and facility-sustaining activities and calculate the total cost of each activity.

2. Identify an activity driver suitable for assigning each activity's costs to products.