15. The following procedure performed by a dairy is the best example of a unit level activity within a manufacturing cost hierarchy:

1. Delivering dairy products to a grocery store
2. Installing new equipment
3. Homogenizing milk in specially designed tanks
4. Receiving milk from farms
5. None of the above

17. The following procedure performed by a food wholesaler is the best example of a unit level activity within a customer cost hierarchy:

1. Calling a retail customer to inquire if the customer is satisfied with the wholesalers service
2. Driving the delivery truck to the retail customers store
3. Sending the retail customer a bill for a recent order
4. Stacking items on the shelf of a retail customers store

The following procedure performed by a home oil delivery company is the best example of a unit level activity within a customer cost hierarchy:

1. Opening an account for a new customer
2. Processing monthly customer billings
3. Pumping home heating oil into a customers oil tank
4. Purchasing a new delivery truck

19. Depreciation of a copy machine in the Human Resource Department would best be classified as what type of cost?

1. Variable Cost
2. Fixed cost
3. Mixed cost
4. Step cost

20. Florida Snorkel Company makes snorkeling equipment. Assume that Hawaii Snorkel Company has offered to produce snorkeling masks for Florida Snorkel Company for $18 per mask. Florida Snorkel Company needs 100,000 masks per period. Florida Snorkel Company can only avoid $125,000 of fixed costs if it outsources; the remaining fixed costs are unavoidable.

Florida Snorkel Company currently has the following costs at a production level of 100,000 masks:

Manufacturing Costs	Total Cost	Cost per Mask
Direct Materials	$ 750,000	$ 7.50
Direct Labor	80,000	0.80
Variable MOH	520,000	5.20
Fixed MOH	650,000	6.50
Total	$2,000,000	$20.00

Florida Snorkel Company should:

1. Outsource production because operating income would increase by $325,000
2. Not outsource production because operating income would decline by $325,000
3. Outsource production because operating loss would decline by $325,000
4. Not outsource production because operating loss would increase by 325,000