E8.32 LO 8.13 (appendix) Assigning costs to activity centres: manufacturer Quality Image Ltd manufactures sophisticated six-tuner personal video recorders and has decided to develop an activity-based product costing system to assign labour and overhead costs to products.

The table below lists Quality Image's costs during the current year and the resource drivers to be used to assign these costs to activity centres.
Quality Image Ltd Labour and overhead costs Wages Building costs Energy Total labour and overhead costs Required Total cost $1 aaoooo 480 000 720000 1 20 000 $2 760 000 Resource driver Headcount Floor area Kilowatt hours Headcount Total amount of resource driver 100 employees 10 000 square metres 250 000 kilowatt hours 100 employees 1. Calculate the costs assigned to the assembly centre given its usage of resource drivers during the year, as follows:
Number of employees Floor oreo power used 20 1 ODO square metres 10000 kilowatt hours 2.
3.
The costs listed above are not Individual costs but a series of costs grouped together Into cost categories such as wages, building costs and so on. Explain why Quality Image combined the costs from ts general ledger into cost categories. Under what conditions is it appropriate to combine coss into cost categories? Give three examples of the types of costs likely to be included in each category.
What is meant by the term resource driver? Can you suggest a better basis for assigning 'Wages'
to activity centres?